Sylvan's Acquisition of Firm Bolsters Place in Market
Sylvan Learning Systems Inc. last week acquired the National Education Corp., bolstering Sylvan's leading position in the fast-growing market for supplemental education services such as distance learning and tutoring.
Sylvan, based in Baltimore, is best known for its hundreds of supplemental-learning centers in shopping malls and public schools, as well as a growing business in job-related certification tests.
National Education, based in Irvine, Calif., has two divisions that focus on postsecondary distance learning and educational products. It also holds a majority stake in a publisher of K-12 supplementary materials.
The deal creates the education market's largest provider of tutoring, testing, distance learning, and supplemental materials, with combined annual revenue exceeding $445 million.
"We thought this was a great opportunity to bring two leaders in this field together," Douglas Becker, the co-chief executive officer of Sylvan, said in an interview last week.
John M. McLaughlin, the editor of The Education Industry Report, said the deal is Sylvan's largest acquisition to date.
"This makes Sylvan a widely diversified education company and the largest company in this field," said Mr. McLaughlin, whose newsletter chronicles for-profit education companies.
Adult Market Targeted
While Sylvan is best known to K-12 educators for its Sylvan Learning Centers, the company has expanded through recent acquisitions into testing employees for certification in such fields as computer software.
Last year, it also bought a 19 percent stake in Jostens Learning Co., one of the nation's leading providers of educational software.
National Education may be best known to K-12 educators through its 83 percent ownership of the Steck-Vaughn Publishing Corp., a large provider of supplemental materials such as workbooks.
Mr. Becker said Sylvan Learning Centers already buy some materials from Steck-Vaughn. But Sylvan's main interest in acquiring National Education was the company's distance-learning and technology operations aimed at the adult training market, he said. Those operations include ICS Learning Systems and the National Education Training Group.
"There is a huge need for people to learn more about technology," Mr. Becker said.
Sylvan plans to acquire National Education in a stock swap that was valued at about $750 million at the time of the announcement on March 12, but whose value dropped closer to $640 million later in the week after Sylvan's stock price fell on the news.
Analysts said some investors did not think the National Education acquisition would help Sylvan in the short term.
The deal is subject to approval by shareholders of both companies and by federal regulators.
National Education suffered financial problems in the early 1990s, but has turned around since 1995.
During the late 1980s and early 1990s, it owned a chain of trade schools that was accused of fraud. Mr. Becker said the company's trade school division was shut down.