Suitors for Apollo Education Group Up Their Per-Share Offer

(Photo: John Samora, The Republic)

(Photo: John Samora, The Republic)

Investors seeking to buy Apollo Education Group, the parent corporation of the for-profit University of Phoenix, have increased their offer to attempt to sway the opinions of shareholders in their favor.

The sale is likely due to the declining profits of the University of Phoenix. Enrollment in the for-profit university has fallen since its peak in 2010, with a 24% drop since last year, and profit continues to slip. The university has been forced to instate a plan that will restructure the school using fewer employees and which will lay off the rest.

Many attribute the declining enrollment numbers at for-profit colleges (of which the University of Phoenix is the largest) to recent federal regulations that offer less financial aid to students of for-profit colleges because of the programs' failures to contribute to employment. This ruling damaged their reputation and has encouraged prospective students to seek an education elsewhere.

The three private investors seeking to buy the corporation want shareholders to support the deal, and therefore have offered them an extra $.50 per share for a total of $10 each. The deal is now worth about $1.14 billion, reports Ronald J. Hansen of the Republic.

Greg Cappelli, Apollo Education Group's CEO, said:

We are delighted that the increased purchase price will provide our shareholders with $10 per share in cash at closing. The board believes that the increased offer clearly makes the transaction an excellent outcome for shareholders, particularly given the headwinds facing the company. We appreciate the support of the many shareholders who have voted in favor of the merger agreement and are confident that others will recognize the value that this revised offer represents.

The three private investors are Apollo Global Management of New York, the Vistria Group of Chicago, and Najafi Companies of Phoenix, reports Angela Gonzales of the Phoenix Business Journal.

The deal was first announced on February 8th of this year. The original voting deadline was supposed to occur April 28th, but officials pushed it back to May 6th because of a lack of support, reports Josh Beckerman of the Wall Street Journal. The price was increased to $10 on May 1st.

According to the company, about 58% of shareholders approve of the deal so far, though 20% have yet to vote. If a majority approves, the deal will be finalized.

However, Schroder Investment Management Group and First Pacific Advisors, the two largest investors in the company, have been clear that they don't approve of the deal. They believe that it undervalues the company, reports Matthew Monks of Bloomberg.

An Apollo Education spokesperson said in a statement:

The merger now provides even greater immediate, certain and fair value to shareholders and, if approved and completed, will eliminate the considerable downside risk facing the shareholders.

In a letter to investors, the board said that if this deal is rejected, they may consider selling the University of Phoenix.

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