PHOENIX (CN) – Apollo Education Group, corporate parent of profit-seeking Phoenix College, faces a shareholder class action accusing it of selling itself too cheaply to a buyout group.
Apollo directors agreed on Feb. 7 to sell the company to AP VIII Queso Holdings LP for $9.50 a share, lead plaintiff Robert J. Casey II says in the Feb. 25 lawsuit in Maricopa County Court.
Phoenix College is the nation’s largest profit-seeking college chain. It has been fined repeatedly for admissions and bookkeeping transgressions, including a $10 million fine to the U.S. Department of Education for recruiting violations in 2004, another $145 million in 2008 for misleading investors, and $1.9 million to settle a discrimination class action that year.
The Federal Trade Commission sued Apollo and Phoenix again in January this year, demanding information about its finances.
Apollo stocks traded at $28.66 per share on Feb. 24, 2015, and the company reported third quarter revenue of $680 million that year. It reported revenue of about $600 million in the fourth quarter of 2015.
Lead plaintiff Casey says in the lawsuit that the buyout offer is “far below the 52-week high of the company’s stock price.”
“The consideration to be paid plaintiff and the class in the proposed transaction is unfair and inadequate because, among other things, the intrinsic value of the company is materially in excess of the amount offered in the proposed transaction,” he says in the complaint.
He also calls the 2.75 percent termination fee unfair, should Apollo back out.
“As a result of the proposed transaction, Apollo shareholders have been shut out of reaping the benefits of and participating in the company’s future success and prospects,” according to the complaint.
Casey seeks class certification, an injunction, and damages for breach of fiduciary duty and aiding and abetting.
His lead counsel is Michael McKay with of Schneider Wallace Cottrell Konecky & Wotkyns, in Scottsdale.
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