Strayer Education and Capella Education will merge together in a $1.9 billion all-stock deal, that will come complete with doctoral, master’s and bachelor’s programs for people throughout the United States.
Virginia & Minnesota Will Come Together In This Merger
Strayer shareholders will own 52% of the ultimately combined company, with Capella shareholders will have the remaining 48%, according to a statement made this Monday. Aiming to help working students across the country, the new for-profit education company expects to help 80,000 students.
According to Fortune, for-profit colleges have had problems trying to increase student enrollments over the past few years, with new roles being placed on student debt causing them to bind admission standards. Strayer had a market value of around $1.02 billion this past Friday, with over 45,000 students enrolled in their programs for the 2016 fall term. Meanwhile, Capella Education had a market value of around $764.5 million.
‘Committed to maintaining standards of excellence across both universities’
According to Forbes, the companies hope to retain a “significant presence” in Minneapolis, where Capella University is mostly based. Capella CEO Kevin Gilligan will take on the role of vice chairman for Strayer, with the company being able to nominate three directors to a board of 12.
The merger is hoped to garner an annual cost savings of around $50 million. By 2019, it is hoped that the deal should be accretive to Strayer’s per-share earnings by around 20% to 25%.
“We are committed to maintaining standards of excellence across both universities and our non-degreed businesses,” added Kevin Gilligan, Capella’s chief executive, in a released statement, according to Star Tribune.