Apollo Education to Be Taken Private in $1.1 Billion Deal
February 08 2016 - 8:40AM
Dow Jones News
Apollo Education Group Inc. said Monday it had reached a deal to
be taken private by a group of investors including Apollo Global
Management LLC in a $1.1 billion deal, as the struggling education
company attempts to overhaul its University of Phoenix
operations.
"For too long and too often, the private education industry has
been characterized by inadequate student outcomes, overly
aggressive marketing practices, and poor compliance. This doesn't
need to be the case," said Tony Miller, operating chief of Vistria
Group, one of the investors in the deal. Mr. Miller is slated to
become Chairman of the Apollo Education Group Board when the
transaction is completed, which is expected in August.
The investing group includes the Vistria Group, funds affiliated
with Apollo Global and Najafi Cos.
The Wall Street Journal had reported Jan. 11 that Apollo Global
was in advanced talks to buy Apollo Education for about $1
billion.
The purchase, at $9.50 a share in cash, represents a 49% premium
over Apollo's closing share price on Jan. 11, just before The
Journal's report. It is a 37% premium over Apollo's closing price
on Friday. The company had said on Jan. 8 that it was exploring a
change in control of the company.
Shares of Apollo Education climbed 28% to $8.90 in premarket
trading.
Apollo Education had been in talks with a number of
private-equity firms since late last year.
Greg Cappelli, chief executive of Apollo Education, said in
prepared remarks that the deal would "allow Apollo Education Group
the flexibility and runway it needs to complete the
transformational plan at University of Phoenix."
In recent years, Apollo and other for-profit higher education
institutions have seen enrollment slide amid scrutiny of their
recruiting, career outcomes and student-loan default rates. Shares
of a number of the companies, especially Apollo Education, have
been battered as a result.
In October, the Defense Department said it had barred the
University of Phoenix system from recruiting on military bases and
prevented troops from using federal money for classes. Earlier last
year, the company, which operates on-campus and online classes,
disclosed probes by the U.S. Federal Trade Commission and the
California Attorney General's office into its marketing and other
business practices. The company has said it intended to cooperate
fully with the agencies' requests for information.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
February 08, 2016 08:25 ET (13:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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