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Exclusive: Hedge fund Sachem Head pushes Instructure to explore a sale - sources

By Svea Herbst-Bayliss
Scott Ferguson, Managing Partner and Portfolio Manager for Sachem Head Capital Management LP, presents during the 2018 Sohn Investment Conference in New York

By Svea Herbst-Bayliss

(Reuters) - Hedge fund Sachem Head Capital Management has built a stake in Instructure Inc <INST.N> and plans to push the U.S. educational software company to explore alternatives, including selling itself, two people familiar with the matter said on Thursday.

New York-based Sachem Head, which has been buying Instructure's shares over time, wants the Salt Lake City-based company to pursue a full sale process, the sources said. The exact size of Sachem Head's position could not be determined.

The sources asked not to be identified because the matter is confidential. A spokesman for Sachem Head declined to comment. Instructure did not immediately respond to a request for comment.

Instructure's stock price jumped as much as 6% on the news of Sachem Head's stake. It ended trading up 4.8% at $46.73, giving the company a market capitalization of $1.8 billion (£1.39 billion pounds).

Instructure's flagship learning management system, Canvas, is a market leader in the higher educational space, where it enjoys strong customer support and has recently begun to move into international markets.

One investor in Instructure is hedge fund Praesidium Investment Management Company, whose portfolio manager Kevin Oram presented the company as one of his best ideas at the recent Sohn San Francisco Investment Conference, citing Canvas' success.

Sachem Head believes Instructure, which has been a publicly-traded company since 2015, can generate interest among private equity as well as publicly-traded companies that want its education offerings, the sources said

Since January, Instructure's share price had gained 16%, lagging the Standard & Poor's 500 20.6% gain, in part because its employee development software product Bridge has failed to generate considerable market share, the sources added.

Instructure has announced plans to hold an analyst day on Dec. 3.

Sachem Head was founded in 2012 by Scott Ferguson and invests $3.2 billion on behalf of clients, according to a recent regulatory filing.

The fund recently called on Whitbread PLC <WTB.L> to sell its Costa Coffee business before it was spun off to Coca-Cola Co <KO.N>. It also pushed Eagle Materials Inc <EXP.N> to split its core businesses, before the company's board agreed to spin off its heavy materials and light materials businesses into two publicly traded entities.


(Reporting by Svea Herbst-Bayliss; Editing by Tom Brown)