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The Princeton Review, Inc. (REVU) announced today that it has entered into a definitive agreement to acquire Penn Foster Education Group, Inc., one of the oldest and largest online career education companies in the United States. The purchase price is $170 million in cash. The Princeton Review has obtained financing commitments for the deal, comprised of approximately $155 million of debt financing and $30 million of equity financing led by Bain Capital Venture Partners and Falcon Investment Advisors, LLC, and expects to complete the transaction before the end of the year.
Penn Foster will become a wholly owned subsidiary of The Princeton Review. It is expected to operate as a standalone unit of the combined company, using its existing brands and under the leadership of the current management team, maintaining its headquarters in Scranton, Pennsylvania. The Princeton Review and Penn Foster will cooperate closely on growth initiatives in customer care, marketing, technology and cross-utilization strategies.
Penn Foster College, Penn Foster Career School, and Penn Foster High School are part of Penn Foster, Inc. For more than 118 years, Penn Foster has been providing accredited career-focused degree and vocational programs in the fields of allied health, business, technology, education, and select trades.
For the calendar year 2008, The Princeton Review reported revenues of approximately $139 million, while Penn Foster had approximately $90 million in revenues in the same period.
Michael Perik, President and CEO of The Princeton Review, commented in a conference call this morning, "Penn Foster is an established player of scale with one of the largest student populations in the post-secondary market. It pioneered correspondence education long before the internet, and it has an extensive library of career training curriculum and content."
He added, "This deal double the size of our EBITDA from day one, and it is accretive to the overall margins of the business. It gives us strong revenue visibility, and it has highly-scalable and cost effective business model. This business also has very good free cash flow attributes."
Mr. Perik concluded, "We believe that this is a new era in the growth of this company."
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