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Apollo's (APOL) Majority Shareholders Vote for Going Private

The recent shareholders’ approval for the proposed divestiture of education company Apollo Education Group, Inc. APOL seems to have brought some respite for the company.

On May 6, 2016, More than 63% of the Class A shareholders voted in favor of the proposal at the Special Meeting of Shareholders,. Meanwhile, 100% of Class B shares were in support of the proposal. On completion of the merger, Apollo Education Group shareholders will receive $10.00 per share in cash.

The education company got a respite from its depleting enrollment when investors proposed to acquire the company in February for about $1.1 billion. These investors include Chicago-based investment company The Vistria Group, LLC, funds affiliated with leading global alternative investment manager Apollo Global Management, LLC (APO) and Arizona-based investment firm Najafi Companies. If the deal gets all the necessary approvals, the transaction is expected to close in Aug 2016.

On Apr 14, 2016, Apollo Education had received recommendation from a leading independent proxy firm Glass, Lewis & Co. to vote for the acquisition. As per the advisory firm, Apollo Education is confronted with challenging operating and regulatory environment, should consider the proposal of going private, and shareholders should consider the fact that it will provide them with the relative certainty of cash at a premium to prevailing market prices.

Upon completion of the buyout, Tony Miller, Chief Operating Officer and Partner at The Vistria Group, will assume the position of Chairman of Apollo Education Group’s board of directors.

Management of this Zacks Rank #3 (Hold) company expects this buyout to provide flexibility and opportunity for the completion of 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 enrollments have been sluggish due to regulatory challenges and competition in the higher education industry. Moreover, the company does not expect enrollment levels to recover any time soon. However, with the transformation of UOP in progress, the company expects enrollments to stabilize over the long term.

Stocks to Consider

Some better-ranked stocks in the education industry include DeVry Education Group Inc. DV, Lincoln Educational Services Corp. LINC and Capella Education Co. CPLA. all carrying a Zacks Rank #2 (Buy).  

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APOLLO GROUP (APOL): Free Stock Analysis Report
DEVRY EDUCATION (DV): Free Stock Analysis Report
CAPELLA EDUCATN (CPLA): Free Stock Analysis Report
LINCOLN EDUCATL (LINC): Free Stock Analysis Report
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