Please ensure Javascript is enabled for purposes of website accessibility

Why Apollo Education Group Inc. Jumped Today

By Timothy Green - May 2, 2016 at 3:27PM

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

A higher bid for the company was announced in an effort to get large shareholders on board.

Image source: Apollo Education Group.

What: Shares of Apollo Education Group (APOL) jumped on Monday following news that Apollo Global Management (APO) had increased its bid for the company. At 3 p.m. ET, shares of Apollo Education were up about 11%, while shares of Apollo Global were 3.2% higher.

So what: The takeover of Apollo Education by a group of investors including Apollo Global was first announced in February. Apollo Education accepted the original bid of $9.50 per share in cash, but large shareholders were not happy with the deal, according the The Wall Street Journal.

In an effort to get the deal through, Apollo Global has now raised its offer to $10 per share, valuing the deal at $1.14 billion. This new price represents the best and final offer, according to the press release announcing the new terms. The shareholder vote on the first version of the deal was delayed last week due to concerns that the transaction would be voted down.

"We are delighted that the increased purchase price will provide our shareholders with $10.00 per share in cash at closing," said Apollo Education Group CEO Greg Cappelli. "The Board believes that the increased offer clearly makes this transaction an excellent outcome for shareholders, particularly given the headwinds facing the company."

Now what: Even after the jump in the stock price on Monday, shares of Apollo Education trade at roughly 86% of the new offer price, suggesting that the market still doesn't believe that the deal will ultimately go through. Apollo Education, which operates for-profit educational institutions such as the University of Phoenix, has faced major headwinds in recent years as the Department of Education worked to rein in the industry. The stock has lost nearly 80% of its value over the past five years.

It's difficult to value Apollo Education given the uncertainty facing the company, and it's unclear whether a $0.50 per-share boost in the offer price will be enough to convince investors to sell.

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.
Apollo Global Management, LLC Stock Quote
Apollo Global Management, LLC

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

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.