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University of Phoenix Owner Fetches $1.1B From Private Equity Group

Apollo Education Group Inc. (APOL) has accepted a $1.1 billion takeover offer from a group of buyout firms led by Vistria Group LLC and also including funds affiliated with Apollo Global Management LLC (APO) and Najafi Cos. The buyers will pay $9.50 per share for the operator of for-profit schools including University of Phoenix, Western International University, the Art Institutes, and Argosy University, which is a 37% premium to Friday's closing price. Jeff Silber of BMO Capital Markets Corp. valued the deal at 1.1 times Ebitda for the 12 months prior to Nov. 30, 2015, or 1.5 times Ebitda for the coming twelve months, in a Monday report. Silber put median valuations for public post-secondary companies at 3.5 times Ebitda and 4.1 times Ebitda. '[I]t is a bit tough to apply this take-out multiple to other stocks in the group given the multitude of issues the company is currently facing,' he wrote, 'including a sharply declining enrollment base at University of Phoenix (much worse than most others in the group), as well as a number of ongoing regulatory issues (the recent investigative subpoena from the attorney general of California announced last Friday, for example).' Apollo last month reported results for the quarter ending Nov. 30 including an operating loss of $45.2 million on net revenue of $586 million. New enrollment during the quarter also dropped, to 24,500 from 39,600 a year earlier.

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