Bedeviled by tumbling share prices and increased government scrutiny of for-profit colleges, Apollo Education Group (APOL) is going private in a $1.1 billion deal with a consortium involving private investment firm the Vistria Group, Apollo Global Management (APO) and Najafi Companies.
Apollo Education shareholders will receive a 37% premium — $9.50 a share — to the company’s Friday closing price of $6.95 per share, the company announced in a statement. Tony Miller, a Vistria Group partner and chief operating office as well as a former senior official at the Education Department under the Obama administration, will become chairman of the Apollo Education Group when the deal closes.
The company’s shares closed up 24% at 8.62. Apollo Education’s 50-day line fell below its 200-day line in March 2015. Its IBD Composite Rating is a paltry 10 out 99, meaning it is being outperformed by 90% of other publicly traded companies.
Apollo Education, which operates the University of Phoenix, as well as other educational institutions, posted grim fiscal Q1 numbers, reporting a loss of $60.8 million, or 56 cents a share. It was its seventh consecutive quarterly earnings decline. The company hasn’t reported a quarterly revenue increase in several years. Apollo Education’s stock has been steadily declining, having fallen by 78% in calendar 2015.
The for-profit education sector has felt the weight of multiple government probes since President Obama moved into the White House in 2009. Corinthian Colleges filed for bankruptcy protection last year and dissolved after regulators accused it of defrauding students by inflating job placement statistics and permitting them to take out high-interest loans while allegedly using illegal debt-collection practices.
ITT Educational Services (ESI) has seen its shares steadily tumble over the last several years. Education Management voluntarily delisted from the Nasdaq stock exchange amid multiple lawsuits and investigations into its business practices.
Grand Canyon Education (LOPE) said in 2014 that it was exploring going private. It has been one of the better-performing companies in the industry. Grand Canyon is scheduled to report Q4 and full-year earnings after markets close on Feb. 17. Analysts polled by Thomson Reuters expect Grand Canyon to earn 79 cents a share in Q4, up 13% from a year earlier. Fourth-quarter revenue is expected to grow 11.5% to $211.9 million. Full-year EPS is expected to be $2.76, up 16.5% from 2014’s total. Full-year revenue is expected to be $774.04 million, a 12% increase from 2014.
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