Academic journal article Journal of Case Studies

Renaissance Learning, Inc

Academic journal article Journal of Case Studies

Renaissance Learning, Inc

Article excerpt

This case was prepared by the author and is intended to be used as a basis for class discussion. The views represented here are those of the authors and do not necessarily reflect the views of the Society for Case Research. The views are based on professional judgment. Copyright [c] 2017 by the Society for Case Research and the authors. No part of this work may be reproduced or used in any form or by any means without the written permission of the Society for Case Research.


Judi and Terry Paul, the founders and principal owners of Renaissance Learning ("RLRN"), were vocal in their objections of the potential sale of RLRN to Plato Learning, Inc. ("Plato"). A bidding war had erupted between Plato and Permira Advisers ("Permira") in response to the announcement on August 15, 2011 that Permira had made an offer to purchase RLRN. On September 10th, 2011, RLRN announced that a special meeting of RLRN's board of directors had been scheduled for Monday, October 17th to vote on the most recent offer from Permira. This announcement resulted in a bid by Plato on October 7th that could have provided a higher price to both the Pauls and the minority shareholders of RLRN than the bid made by Permira. Over the weekend of October 8th and 9th, 2011, Permira Advisers ("Permira") received a request by Renaissance Learning, Inc. ("RLRN") to increase the previous bid that Permira had made to purchase RLRN. The request was potentially made to forestall litigation against RLRN by some of its minority shareholders for not accepting Plato's higher offer. Representatives from Permira informed RLRN that they would need authorization from Permira's investment committee to accept the increase and that they would meet with the investment committee on Monday, October 10th to discuss the offer (Renaissance Learning, 2011c).

Plato's offer of October 7th to purchase RLRN was valued at $496 million. Approximately 69% of RLRN's stock was owned by the Paul family, who were the founders and principals of the firm. The outstanding offer by Permira was to offer $16.60 per share to the non-controlling shareholders and $15.00 per share to the Paul family owners. The total value of Permira's offer was $455 million. RLRN requested that Permira increase its offer to $17.25 per share for the non-controlling shareholders and maintain the price of $15.00 per share to the Paul family. There were approximately 9.227 million shares of RLRN's stock held by non-controlling shareholders and 20.122 million shares held by the Paul family (Renaissance Learning, 2011b and 2011c).

The initial merger agreement, submitted by Permira on August 15th, 2011, provided Renaissance shareholders with a price per share of $14.85. On August 24th, Plato Learning, Inc. submitted an unsolicited bid to acquire Renaissance for $15.50 per share. The principals of Renaissance, Judi and Terry Paul, were unsupportive of Plato's bid although it provided a greater return for them and the non-controlling shareholders of the firm. Permira provided a counter offer of $16.60 per share to the non-controlling shareholders and $15.00 per share to the Pauls on September 27th. The average value per share would have matched Plato's offer of $15.50 per share. On October 7th, Plato made its final offer of $496 million, which provided an average of $16.90 per share for all of the shares of RLRN, however the board of RLRN, per the offer, was allowed to offer a higher price per share to the non-controlling shareholders if the Paul family was willing to accept a lower price per share for their shares (Renaissance Learning, 2011b and 2011c). The Paul's had given the following reasons to their board of directors for their opposition to Plato's offers:

* A high likelihood that the transaction would not be completed with Plato due to the increased amount of time needed to close the deal and recent turmoil in the financial markets. The existing agreement with Permira was expected to be completed in the middle of October 2011. …

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