Zacks_Analysts' Blog : Apollo to Acquire Carnegie Learning - Analyst Blog

One of the world's largest private education providers, Apollo Group Inc. (APOL), in streak to enhance students' retention and graduation rates, has recently entered into an agreement to acquire Downtown based math curricula publisher, Carnegie Learning Plc.

The deal is valued at $96.5 million, of which $75.0 million will be paid for the acquisition of 100% stock of Carnegie Learning plc along with Cognitive Tutor math software. In a separate transaction, a sum of $21.5 million will be paid toward the acquisition of related technology from Carnegie Mellon University. The transaction is expected to be completed by October 2011.

Founded by a team of cognitive and computer scientists of Carnegie Mellon University and some expert mathematicians, Carnegie Learning came into existence in 1998 and is currently providing math instructions to more than 600,000 students in 3,000 schools nationwide.

As per the terms of the deal, Carnegie Learning will continue to provide innovative learning tools for the K-12 students of Apollo Group. The company believes that mathematics is an important subject, which the students of this generation must excel to compete in such a fierce competitive environment. Therefore, Apollo wants to integrate adaptive learning technology of Carnegie Learning into instructional, evaluation and problem-solving activities of the institution to enhance the theoretical understanding in mathematics.

Moreover, Apollo Group expects the acquisition to add 7 cents to 9 cents per share to earnings in fiscal 2012.

Apollo Group faces intense competition from other companies offering postsecondary education, such as DeVry Inc. (DV), Strayer Education Inc. (STRA) and Career Education Corp. (CECO).

Apollo's shares maintain a Zacks #3 Rank, which translates into a short-term Hold rating. Our long-term recommendation on the stock remains Neutral.