BPP-Apollo Global in £303.5 milllion deal talks

09 June 2009

BPP, the business college operator has agreed to a 620p-per-share offer from Apollo Global, the US education investor. According to the deal BPP's equity will fetch it £303.5 milllion.

In late afternoon trading Monday, BPP shares rose 50p at 617p, but the bid only drew a lukewarm response from several shareholders. Sentiment among shareholders remained largely favourable on considerations that it was Apollo's top offer. They say it was possible for people to argue that the deal was selling BPP cheap.

The two companies have been in discussions since the end of April when they first told the market they were working out a deal. The announcement had send BPP shares soaring up 70 per cent over the previous closing price of 365p.

According to rumours at that time, Pearson, owner of Financial Times, was considering making a counter-bid, but the rumours were later scotched by a person familiar with Pearson's thinking in the matter.

The deal is likely to be concluded via a scheme of arrangement whereby the plan would need to be approved by 75 per cent of a poll of shareholders. The offer would give BPP and enterprise value of £331 million.

BPP is the UK's only for-profit business college with the power to award degrees. According to David Sugden, BPP chairman, the degree-awarding powers were likely to have been an important consideration for Apollo. He said that it was a good premium and good price in what are uncertain economic times.