Education Management Draws $3.4 Billion Offer; Providence Equity, Goldman To Buy For-Profit School In Bet on Sector's Prospects
Providence Equity Partners Inc. and Goldman Sachs Group Inc.'s investment arm are expected to purchase Education Management Corp. for $3.4 billion, people familiar with the matter said, as increased access to federal funding improves the prospects of for-profit trade schools and universities.</br></br>Education Management runs 72 primary campuses across the U.S. and Canada, training its 72,000 enrolled students in fields such as fashion, psychology and Web-site design. It also runs a small but growing operation providing online instruction.</br></br>For-profit education has become a growth business in the U.S., as tuition costs at traditional nonprofit colleges and universities soar. New students also are choosing to take their courses online, a more convenient and more profitable method.</br></br>Providence and Goldman Sachs are expected to pay about $43 for each share of Education Management, a 16% premium to the Pittsburgh company's stock price in Nasdaq Stock Market composite trading Friday. The company's board has approved the transaction, and it is expected to be announced this morning. Shareholders must approve the final offer.</br></br>The for-profit space was given a boost in recent days, when Congress lifted the requirement that colleges must deliver half their courses at a physical campus to qualify for financial student aid. That means the for-profit providers, of which Education Management is ranked No. 3 by revenue, can attract a new set of potential students to their programs.