(Adds Instructure's comment, paragraph 8, closing share price)
By Svea Herbst-Bayliss
BOSTON, Jan 27 (Reuters) - Four investment firms opposing the sale of U.S. educational software company Instructure Inc to private equity firm Thoma Bravo picked up support on Monday when an influential proxy advisory firm came out against the planned all-cash deal of roughly $2 billion. Institutional Shareholder Services Inc (ISS) recommended that Instructure shareholders vote against the company's planned sale to the private equity firm at a Feb. 13 meeting.
"Given legitimate concerns regarding the conduct of the process, a seemingly uncompelling valuation, and a strong standalone case, a vote AGAINST the transaction is warranted under the proposed terms," ISS said in a note to clients, including large and small investment firms which often follow ISS's recommendations on proxy and merger votes.
The ISS note, released on Monday, was seen by Reuters.
Hedge funds Praesidium Investment Management, Rivulet Capital LLC and Lateef Investment Management as well as Oberndorf Enterprises have said they plan to vote against the deal and criticized the price as well as how the company found a buyer.
The firms either declined to comment or could not be reached for comment.
Thoma Bravo did not comment.
Instructure said it "strongly disagrees with ISS' recommendation" and said it conducted an "exhaustive, conflict-free and well-publicized strategic review process" and that no other bidder topped Thoma Bravo's $47.60 offer.
Instructure said in early December it planned to sell itself to Thoma Bravo and that other bids could be made during a 35-day go-shop period.
Market reaction to the proposed sale, which represented a 10% discount to Instructure's closing share price on Dec. 3, was negative when it was announced on Dec. 4.
Instructure shares closed 0.3% higher at $47.98 on Monday.
From the day the deal was announced through Jan. 22, the end of the go-shop period, shares traded above Thoma Bravo's offer, with an "average closing price of $48.27," ISS said.
ISS said the sales process "began with a stutter-step" and was limited to handful of financial buyers during the first 10 months of 2019. Instructure said it "conducted a comprehensive and deliberate process, lasting eleven months and ultimately involving 40 parties."
ISS said Instructure did not treat all potential buyers alike, allowing Thoma Bravo to sign a confidentiality agreement within six days while it waited five months to let another party sign one. (Reporting by Svea Herbst-Bayliss in Boston Editing by Matthew Lewis)