Hey Folks, I would like to know if some of you has heard the same rumor
that is starting to spread on the floors of Wall Street. Apollo Group's is
considering a bid for Career Education (CECO) or a possible merger between
both companies. Sounds great for Ceco, that is trading below cash Net
This 'rumor' makes no sense. Why would Apollo, who is always the one with the LARGEST target on it's back, look to take on more uncertainty by acquiring a competitor who's currently battling with it's own accreditors? Answer = They wouldn't.
Today's recent BPI news aside, the entire industry has entered very murky water and nobody is tossing a life-line, or speaking highly about the 'for-profit' education industry at this time. While consolidation is something you might see in other markets no so heavily regulated, IMO, we're likely to see more bankruptcy = consolidation, than consolidation on purpose over the next 18-months.
Schools to watch in that area; Everest, Westwood, American Military University, Ashford to name a few
I haven't heard any rumor. Sure, it makes sense - APOL has $600MM in cash and about half a billion in free cash flow. CECO is only trading at $250MM though they have net cash of $350MM. They can easily buy them out for $500MM or 100% premium and still only really pay $150MM for the business. All that being said, I would be really surprised if that would happen. Investing with the hope of a buyout is generally chasing for fool's gold.
In the mean time, I am buying in the $3.70s and selling in the $3.90s till there is a catalyst.