University of Phoenix stable as parent weighs sale
- University of Phoenix says overhaul plans unchanged.
As its parent company weighs a possible sale, the University of Phoenix says it is maintaining an overhaul announced last summer that will eventually close dozens of sites across the country while forging more business certificate programs.
The board of the Phoenix-based Apollo Education Group announced Monday they are exploring company’s “strategic alternatives,” a nod to its deteriorating finances.
Those alternatives reportedly include a sale to Apollo Global Management, an unrelated New York-based company. Both Apollos have been in advanced talks, according to the Wall Street Journal.
Both Apollo Education Group and Apollo Global Management declined to discuss the matter.
Apollo Education’s stock has ricocheted this week, but Timothy Slottow, the university’s president, said no new changes at the company’s flagship property are underway.
“What I can tell you with absolute certainty is my team is 100 percent focused on following the (previously announced) plan,” Slottow said Wednesday. “We are focused and there is no change right now whatsoever.”
That plan, outlined in August, includes closing 24 sites across the country over several years. The university plans to keep 67 sites in 17 states. It continues to add certificate programs even as degree offerings have been trimmed.
University of Phoenix parent explores possible sale
While the university is emphasizing stability, investors still seem to be unsure what to make of a potential sale.
On Friday, Apollo’s stock closed at $6.59 per share. By Monday morning, the stock reached $7.68 before sinking steadily to $6.38. On Tuesday, the stock recovered to $7.39, but was headed down again Wednesday, closing at $7.09.
Investors have about $770 million staked in the company, about half what they had at the end of June.
In its latest quarterly report, Apollo said new enrollment had sunk 38 percent compared to the same period a year ago and the company lowered its expected overall enrollment to 140,000 from 150,000. Apollo posted a quarterly loss for the third time in the past year and has seen its stock skid from $28 nine months ago.
Analysts who track Apollo were puzzled by the board's limited announcement about the company's future.
"The timing of the news around exploring strategic opportunities is odd to us, and we think it is likely being driven by Peter Sperling, the controlling shareholder," said Paul Ginocchio, an analyst for Deutsche Bank in a note to investors. "Peter Sperling, a beneficiary and co-trustee of the Apollo Class B Voting Stock Trust, sold about $23 (million) shares at the end of October."
Declining enrollment at University of Phoenix suggests much leaner Apollo ahead
He estimated Apollo's cash reserves are worth about $6.59 per share, something that could help defray any purchase of the company. In the long run, the university could function as a source of continuing cash, Ginocchio wrote.
"I've had folks ask me, if you can't comment, then why did you have to issue a press release. Was it something that your attorneys pushed you to do?," said Jeff Silber with BMO Capital Markets during a Monday conference call with Apollo investors.
Even so, most analysts polled by Thomson Reuters have for months recommended investors hold their Apollo stock.
Apollo Global's stock has moved from $14 per share last week to $13.92 by Wednesday. Over the past year, its stock has tumbled from nearly $26 in February.