Tuesday, Corinthian Colleges, Inc. (COCO), a provider of post-secondary education, said it has signed a definitive deal to acquire Heald Capital LLC, the parent company of Heald College which provides career-focused academic programs, for $395 million in cash.
The purchase price also includes the repayment or assumption of undisclosed amount of Heald's debt and other closing payments. Corinthian plans to finance the acquisition using its recently announced $280 million credit facility and available cash.
The acquisition is expected to be slightly accretive to Corinthian's earnings in the second half of fiscal 2010, and to add about $0.15 - $0.20 to earnings per share in fiscal 2011.
By virtue of Heald's limited liability ownership structure, Corinthian will also receive a tax "step up" in the assets of Heald Capital LLC and its subsidiaries that is expected to provide future tax benefits of about $70 million.
San Francisco, California-based Heald operates 11 campuses and had about 12,300 students at September 30, 2009. Heald prepares students for careers in healthcare, business, legal, information technology and other growing fields, primarily through associate degree programs.
Heald's student population is expected to grow by about 30% in its fiscal year ending December 31, 2009, compared to the same period last year. Heald is expected to generate revenues of about $180 million - $185 million for the fiscal year ending December 31, 2009.
The deal is expected to close by March 31, 2010, subject to regulatory approvals and customary closing conditions .
COCO is currently up $0.89 or 5.05% and trades at $18.52.
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