Yahoo Finance Apollo Education Group (APOL) to go Private for $1.1B
Shares of Apollo Education Group, Inc. APOL soared 24.03% on Feb 8, as the education company announced that it has signed a definitive agreement to be acquired by a consortium of investors for about $1.1 billion. These investors include Chicago-based investment company, The Vistria Group, LLC; funds affiliated with Apollo Global Management, LLC (APO), one of the leading global alternative investment manager; and Najafi Companies, an Arizona-based investment firm. If the deal gets all the necessary approvals, the transaction is expected to close in Aug 2016.
As per the agreement, shareholders will get $9.50 per share in cash for both Class A and B shares. This is equivalent to 30% premium over Apollo Group’s 30-day volume weighted average stock price for the period ended Feb 5, 2016. This is also equivalent to a 44% premium over its closing price on Jan 8, 2016, the day it attracted investor attention by saying that it was looking for strategic alternatives. However, the transaction requires approvals from the company’s stockholders, the U.S. Department of Education, the Higher Learning Commission, and the state regulatory and other programmatic accreditation bodies.
Upon completion of the buyout, Tony Miller will assume the position of Chairman of Apollo Education Group’s board of directors. Miller is presently serving as the Chief Operating Officer and Partner of The Vistria Group. Formerly, he was a Deputy Secretary of the U.S. Department of Education.
Management of this Zacks Rank #3 (Hold) company expects this buyout to provide flexibility and opportunity to complete the transformation of the company’s flagship segment, University of Phoenix (UOP). The company has been witnessing a decline in UOP enrollments since 2010. In fact, enrollments have plunged more than 60% since late 2010. UOP’s enrollments have been sluggish due to regulatory challenges, and changes and competition in the higher education industry. Moreover, the company does not expect enrollment levels to rebound any time soon. However, with the transformation of UOP taking place, the company expects enrollments to stabilize over the long term.
Meanwhile, other private education companies including DeVry Education Group Inc. DV, Universal Technical Institute, Inc. UTI and Capella Education Company CPLA are also struggling to attain decent enrollment levels as prospective students remain reluctant to incur debt for higher degree, with the improvement in the job market and recovery in the macroeconomic scenario. The competitive landscape also remains intense.
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