For-Profit Strayer, Capella to Merge

The two publicly traded for-profit college providers will combine corporate functions, but remain separate institutions, in deal worth $1.9 billion.

October 30, 2017
 

Strayer Education and Capella Education, two of the remaining publicly traded for-profit-college companies in an industry that has been roiled by enrollment losses and regulatory scrutiny, will announce today that they will merge their corporate functions but continue to operate as separate institutions.

The combined value of the merged entities is $1.9 billion.

The combined entity will be called Strategic Education and will have about 80,000 students. The 125-year-old Strayer, which is based in Virginia, operates 73 Strayer University campuses mostly in the Eastern half of the United States, plus an online program offering certificates up through master's degrees.

Capella, based in Minneapolis, is an online university focused on adults that was established in 1993. A majority of its students are in master's or doctoral programs, and it was one of the earliest institutions to win federal approval for competency-based degree programs.

The merger comes after a period in which several major for-profit college providers have closed and many others have struggled with enrollment losses and intense regulatory scrutiny from the Obama administration. Strayer and Capella have largely avoided significant trouble, and Strayer even earned praise from Senate Democrats during their review of the industry several years ago.

The Trump administration has acted to delay implementation of Obama-era rules focused on the for-profit sector and has signaled an easier regulatory ride for for-profit colleges.

“Strayer and Capella complement each other in powerful ways and share cultures that value integrity and innovation," said Kevin Gilligan, chairman and chief executive officer of Capella, who will become vice chairman of Strayer under Robert S. Silberman, who is currently Strayer's executive chairman. "Uniting Strayer University’s degrees in business, including the Jack Welch Management Institute, accounting, economics and information technology with Capella University’s competency-based flexible degree programs, health-care offerings and robust doctoral portfolio will help us better meet the educational needs of students in the modern economy. We are committed to maintaining our standards of excellence across both universities and our nondegreed businesses.”

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