Apollo Global Management and other investors agreed to buy Apollo Education Group Inc., owner of the University of Phoenix, as for-profit schools struggle to win back the trust of students and regulators after an industry scandal uncovered examples of high tuition and paltry results.
The buyers, which also include funds affiliated with Chicago-based Vistria Group and Jahm Najafi’s private investment firm Najafi Cos., will pay $1.1 billion, or $9.50 for Class A and Class B shares, and take the company private, Phoenix-based Apollo Education said in a statement Monday.
The price represents a 44 percent premium over the closing price Jan. 8, the day before Apollo’s board said it was pursuing strategic alternatives. The board approved the planned transaction, which must clear regulatory conditions and is expected to close by August. The stock rose 24 percent Monday in New York to $8.60 a share. Shares topped $75 in October 2009.
“We are excited by the opportunity to build on the transformational work being done by the company,” Tony Miller, Vistria’s chief operating officer, said in the statement. “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.”
Miller, a former deputy secretary at the U.S. Department of Education, will become chairman of Apollo Education once the deal closes.
Apollo Education is worth about $29 a share, First Pacific portfolio manager Dennis M. Bryan said.
Apollo Education, founded in 1973 by the late John Sperling, is the largest U.S. for-profit college chain in a shrinking industry. Over time it capitalized on the idea that working adults could access higher education online.
