LONDON, UK / ACCESSWIRE / November 1, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Strayer Education, Inc. (NASDAQ: STRA) ("Strayer"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=STRA. The Company announced on October 30, 2017, that it will merge with Capella Education Co. (NASDAQ: CPLA) ("Capella") in an all-stock deal of equals transaction. The merger will create one of the largest for-profit college companies, serving about 80,000 students across the United States. The combination is likely to achieve corporate level efficiencies, enabling each university to accelerate innovations that improve affordability and enhance academic and career outcomes for students. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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New Combined Company
Upon closing, Strayer will be the remaining corporate entity under which both universities will operate. Strayer will be renamed Strategic Education, Inc, with its ticker symbol remaining the same. Strayer's Board will be increased to 12 directors, with three to be nominated by Capella. The combined Company's corporate headquarters will be based in Herndon, Virginia, and will maintain a significant presence in Minneapolis, Minnesota, including the headquarters of Capella University.
Terms of the Merger Agreement
- Based on the closing prices of Strayer's and Capella's common stock on October 27, 2017, the implied equity value of the combined Company is approximately $1.9 billion.
- As per the agreement terms, Capella's shareholders will receive 0.875 Strayer shares for each Capella share, representing a premium of around 22% to the closing price of Capella shares on October 27, 2017.
- Strayer's shareholders will own 52% and Capella's shareholders will own 48% of the combined Company on a fully diluted basis, upon completion of the merger. The deal is expected to be tax-free to shareholders of both Companies.
- The transaction, expected to close in Q3 2018, has been unanimously approved by the Boards of Directors of both Companies.
- The deal is subject to customary closing conditions, including antitrust approvals, approvals by the Department of Education, state regulators, and relevant accreditation bodies, as well as approval by both Strayer's and Capella's shareholders.
- Both the universities, which together serve some 80,000 students across all 50 states, will continue to operate as independent and separately accredited institutions.
Transaction Likely to Enhance Collective Ability to Deliver Better Academic Outcomes
Robert S. Silberman, Executive Chairman of Strayer, stated that the Company is delighted to have the opportunity to combine Capella's capabilities with Strayer's 125-year heritage of educating working adults. This transaction will enhance collective ability to deliver better academic outcomes to more working adults, at more affordable prices.
Financial Benefits of the Agreement
- Following the close of the transaction, strong, debt-free balance sheet and enhanced cash flow will position the combined Company to return capital to shareholders through an expected annual dividend of $2.00 per share.
- The deal is likely to achieve annual cost savings of around $50 million to be fully phased in within 18 months of closing, of which half is expected to be realized during the 12 months following closing.
- The merger is also expected to be accretive to Strayer's earnings per share (EPS) by approximately 20% to 25% by 2019.
Following the transaction, Robert S. Silberman will serve as the Executive Chairman of the combined Company; Kevin Gilligan, currently the Chairman and Chief Executive Officer (CEO) of Capella, will be the Vice Chairman, and Karl McDonnell, currently serving as CEO of Strayer, will be the CEO of the new entity.
About Strayer Education, Inc.
Founded in 1892, Strayer is an education services holding Company that owns Strayer University. The mission of Strayer University is to make higher education achievable for working adults.
About Capella Education Co.
Established in 1991 and headquartered in Minneapolis, Minnesota, Capella is a pioneer in developing online, high-quality degree programs and job-ready skills offerings for adults.
Last Close Stock Review
At the closing bell, on Tuesday, October 31, 2017, Strayer Education's stock dropped 6.27%, ending the trading session at $93.73. A total volume of 430.84 thousand shares have exchanged hands, which was higher than the 3-month average volume of 55.87 thousand shares. The Company's stock price skyrocketed 5.36% in the last one month, 17.05% in the past three months, and 59.79% in the previous twelve months. Moreover, the stock surged 16.25% since the start of the year. The stock is trading at a PE ratio of 29.24 and has a dividend yield of 1.07%. The stock currently has a market cap of $1.04 billion.
On Tuesday, October 31, 2017, the stock closed the trading session at $81.45, declining 4.68% from its previous closing price of $85.45. A total volume of 433.22 thousand shares have exchanged hands, which was higher than the 3-month average volume of 62.87 thousand shares. Capella Education's stock price surged 13.68% in the last one month, 20.76% in the past three months, and 11.42% in the previous twelve months. The stock is trading at a PE ratio of 22.52 and has a dividend yield of 2.01%. The stock currently has a market cap of $950.52 million.
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