There are growing concerns among investors on the delay of the University of Phoenix sale. This comes after the Department of Education's intense scrutiny of the proposal.
Inside Higher Ed reported that investors are "getting jittery" while waiting if the Department of Education will approve the proposed sale of the Apollo Education Group to another group of three private equity firms. The group is the owner of the University of Phoenix.
Back in February, The Apollo Education Group announced the $1.14 billion deal, which will make the nation's largest university private. Last May, the Phoenix Biz Journal reported that shareholders have approved the merger agreement.
New owners of the company will include The Vistria Group LLC, funds affiliated with Apollo Global Management LLC and Phoenix-based the Najafi Cos. They are just waiting on regulatory approvals by the U.S. Department of Education, the Higher Learning Commission as well as state regulatory and programmatic accreditation bodies.
It is expected that the deal will be closed by the end of this year. Shareholders have agreed to receive $10 cash per share.
"We believe this new ownership structure will allow Apollo Education Group to continue to transform University of Phoenix," Apollo CEO Greg Cappelli said, "further expand our global operations, drive operational efficiency, and serve as the leading provider of high quality education for working adults."
There have been no updates from Washington, though. Several experts noted that this is a big task for the Department of Education.
"The market doesn't expect it to happen anytime soon," Barmak Nassirian, director of federal relations and policy analysis for the American Association of State Colleges and Universities, said. "The crowd is casting a negative vote."
Credit Suisse industry analyst Trace Urdan added that the "perception of general hostility" by the Obama administration toward the for-profit sector may be a major factor in the delay. He believes that this has led investors to an "emerging consensus that the deal is not going to happen."
