Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Apollo Education Group Inc. Jumped Today

By Timothy Green - Feb 8, 2016 at 1:19PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The private education company is being taken private at a time of incredible uncertainty and volatility in the industry.

What: Shares of Apollo Education Group (APOL) jumped on Monday after the company announced that it had accepted a buyout offer from a consortium of buyers. At 12:15 p.m. ET Monday, the stock was up about 24%.

So what: A group of investors, including The Vistria Group and Najafi Companies, agreed to pay $9.50 in cash for each share of Apollo Education. This price represents a 44% premium over the stock's closing price on Jan. 8.

Apollo Education CEO Greg Cappelli touted the deal. "This new structure will allow Apollo Education Group the flexibility and runway it needs to complete the transformational plan at University of Phoenix, which will enable us to serve our students more effectively during a period of unprecedented volatility within our industry. We will also continue to expand our international operations and remain committed to driving principles of operating excellence."

Now what: This acquisition comes at a difficult time for private education companies. Shares of Apollo Education have tumbled 66% over the past year and 80% over the past five years, as the industry and the company have been rocked by regulatory issues.

APOL Chart

APOL data by YCharts.

Tony Miller, who will become chairman of the Apollo Education Board once the deal is complete, talked about the plan to turn around the company. "We are excited by the opportunity to build on the transformational work being done by the company. 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. We are committed to accelerating and enhancing efforts to establish University of Phoenix as the leading provider of quality higher education for working adults and to continue supporting the organization's commitment to operating in a manner consistent with the highest ethical standards."

For Apollo investors, this deal isn't a bad outcome, given the myriad issues facing the company.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apollo Education Group, Inc. Stock Quote
Apollo Education Group, Inc.
APOL

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.