The Apollo Education Group, the parent company of the University of Phoenix, announced on Tuesday that its Apollo Global subsidiary had agreed to acquire Open Colleges Australia, one of Australia’s oldest and largest providers of distance learning.
Under the agreement, Apollo Global, through a subsidiary, will purchase 70 percent of the outstanding shares of Open Colleges for approximately 110 Australian dollars in cash, or about $98.5-million (U.S.) at current exchange rates, plus contingent payments that will be principally based on 2014 operating results and could total $47-million (U.S.) more. Apollo Global has an option to purchase the remaining 30 percent of the Australian company in the future.
Apollo’s announcement describes Open Colleges as a leader in online learning in Australia with more than 130 courses in disciplines such as health care, business and management, finance and accounting, technology, and design. It focuses on meeting the needs of adult learners by providing flexible, accessible, and affordable programs.
Trace A. Urdan, an analyst with Wells Fargo Securities, said in a news release that Open Colleges’ business model was similar to that of the University of Phoenix. “We would expect Apollo to be able to add significant value to the business in terms of marketing expertise, technology content, and execution,” he said. “This strikes us as an extremely positive direction for Apollo Global toward businesses that the parent company understands well.”
The deal follows another disappointing year for the Apollo Education Group and other for-profit higher-education companies in the United States, which have been scrambling to reverse enrollment declines, campus closures, and employee layoffs. Apollo announced more layoffs in October after reporting that enrollments had dropped again, by 18 percent from the previous year, and that operating income was down by 36 percent.
