Apollo Education Group, Inc., which owns the University of Phoenix and is a major player in for-profit higher education, this morning announced a deal to be sold to a consortium of investors, including the Vistria Group, funds affiliated with Apollo Global Management and Najafi Companies, for $9.50 per share. The deal is a $1.1 billion transaction. When the deal closes, Tony Miller, chief operating officer and partner of the Vistria Group and former deputy secretary of the U.S. Department of Education, will become chairman of the Apollo Education Group board.
“The Apollo Education Group Board of Directors reviewed strategic alternatives and believes this transaction is in the best interest of all shareholders and strongly supports our transformation efforts,” said a statement from Greg Cappelli, chief executive officer of Apollo Education Group. “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.”
Apollo has faced increased scrutiny from federal and state regulators, and the company has been shrinking. Corporate filings released last month, when Apollo announced it might be sold, revealed Apollo’s first-quarter revenue is down to $586 million compared to $714.5 million a year ago. Enrollment also continues to decline. Total enrollment is at about 201,000 students, compared to about 267,000 last year.
The press release says the Vistria Group is based in Chicago and is a "private investment firm focused on investing in middle-market companies in the health care, education and financial services sectors." The firm's website is private.
At a time when many in for-profit higher education make no secret of their dislike of the current administration, which has pushed for much tougher regulation of the sector, Vistria is well connected to the Obama administration. It is led by Martin Nesbitt, whom Fortune in 2014 called a "close pal" of the president's. Nesbitt also leads the foundation planning the Obama presidential library. Miller, the Vistria official who will lead the new Apollo board, held his Education Department position during the first Obama administration.
In late 2014, Vistria recapitalized Penn Foster, a for-profit network of career-related programs that was founded in 1890.