Apollo Education Holders Approve Bid From Apollo Global

Apollo Education Group Inc. shareholders approved the $10.00-a-share offer valued at $1.14 billion from a group led by Apollo Global Management LLC.

More than 63 percent of the Class A shares that voted were in favor of the transaction, which represented about 54 percent of the outstanding Class A shares, according to a statement Friday. All Class B shareholders voted for the transaction.

The private equity firm, along with investors including Vistria Group, revised an earlier offer of $9.50 per share, after major shareholders said it undervalued the for-profit education company. Apollo Education’s shares climbed 7.2 percent in after-hours trading to $9.59, after closing Friday at $8.95. At the closing price, the company has a market value of about $972 million.

“This has been a robust process in which our board of directors reviewed many strategic alternatives and found this transaction to be in the best interest of all stakeholders,” Greg Cappelli, chief executive officer of Apollo Education, said in the statement. The new structure will allow Apollo Education “to continue to transform University of Phoenix, further expand our global operations, drive operational efficiency and serve as the leading provider of high quality education for working adults,” he said.

The revised offer is a 52 percent premium over the Jan. 8 closing price, the last trading day before the company’s board announced it would explore strategic alternatives on Jan. 11.

Phoenix Division

The shareholders that had protested the bid, Alberta Investment Management Corp., Schroders Plc and First Pacific Advisors LLC, control more than 26 percent of Apollo Education’s Class A Shares.

Apollo Education played its own version of proxy hardball with shareholders, telling them in a letter last month that if they turned down the leveraged buyout, the Phoenix-based company would have to consider selling the University of Phoenix, its main division, possibly for a low price.

For the buyout firm, this deal will round out several it already accomplished this year. Last month, the New York-based firm closed a $1.4 billion buyout of grocery chain Fresh Market Inc. This week it finalized its acquisition of home-security company ADT Corp., which at $12 billion is the biggest private equity-backed acquisition announced this year.

Business Model

Apollo Education, like others in the for-profit education industry, has struggled with declining enrollment after tougher regulations were passed and numerous probes into its business practices. Another listed company, Corinthian Colleges Inc., filed for bankruptcy last year, shut down its schools and liquidated its assets.

The U.S. Department of Education enacted rules in 2015 meant to ensure that schools demonstrate their students could obtain employment that would allow them to make enough money to pay off their education loans. Failure to do so could threaten a school’s participation in the federal student loan program, making it harder to recruit new students.

Attorney generals in several states have opened investigations into the company’s business practices, such as marketing, recruitment and financial aid, according to a regulatory filing. Apollo Education said it is cooperating with the investigations.

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