US: For-profit college operators Capella and Strayer join in a $2 bn merger

Strayer Education Inc. and Capella Education announced Monday, October 30, they are merging, in a US$2 billion deal that will make the combined company one of the largest for-profit college operators in the country.

Shareholders in Herndon, Va.-based Strayer will own 52% of the combined company’s stock, while Capella investors will hold the rest. Both boards have voted unanimously for the deal, which the companies anticipate will close in the third quarter of 2018. They will need state and federal approvals, including a thumbs up from the Department of Education.

The agreement arrives as for-profit schools continue to struggle with volatile enrollment and regulatory uncertainty. While the Trump administration has relaxed many rules targeting the sector, Democratic state authorities continue to go after for-profit colleges for abusive sales and marketing tactics.

Neither Strayer nor Capella has endured the legal headaches of some of their competitors, yet tepid growth in the number of people seeking degrees remains a hurdle — but one that investment analysts say the combined companies may be able to overcome.

Full Content: Wall Street Journal

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