Bain Capital's $5.6B PowerSchool Takeover Under Microscope

Bain Capital’s plan to acquire PowerSchool Holdings PWSC for $5.6 billion is under investigation for conflicts of interest and concerns over an inadequate deal price.

What Happened: Shareholder rights law firm Julie & Holleman on Monday announced that it is probing the proposed transaction because private equity firms Vista Equity Partners and Onex, PowerSchool’s two largest shareholders, are posing conflicts of interest by “rolling over” shares into the post-close company while public shareholders are being cashed out.

The deal is expected to close in the second half of this year.

See Also: Global Giants KKR, Bain Capital Target Asia’s Rising Data Center Space Amid AI, Cloud Services Upswing

Bain and PowerSchool didn’t immediately respond to Benzinga’s request for comment.

Why It Matters: PowerSchool, a California-based provider of cloud-based software for K-12 education in North America, announced on Friday that it had agreed to be acquired by Bain for $22.80 per share in cash.

Julie & Holleman said that per-share deal price is less than what the company’s stock was trading at earlier this year, less than the average Wall Street analyst stock price target of $24.57 per share and well below the high-end price target of $30 per share.

But PowerSchool said in its announcement that per-share purchase price represents a premium of 37 percent over PowerSchool's unaffected share price of $16.64 as of May 7, 2024, the last trading day prior to media reports regarding a potential transaction.

PowerSchool’s shares have declined $0.11 since Monday’s opening bell to $22.36 by the afternoon.

If you’re interested in investing in the education technology (EdTech) industry, here are three related ETFs to consider: Global X Education ETF EDUT, Amplify Transformational Data Sharing ETF BLOK, and iShares U.S. Technology ETF IYW.

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