ETS signs Sylvan to deal worth up to $5.5 million

April 15, 1994|By Michael Dresser | Michael Dresser,Staff Writer

Educational Testing Services, the nation's largest test provider, announced yesterday that it will invest up to $5.5 million in Sylvan Learning Systems Inc. and make the Columbia-based company its worldwide partner in computer-based testing.

The Princeton, N.J.-based nonprofit organization said it had signed Sylvan to a 10-year contract under which the publicly traded Maryland company would adapt several of ETS' most frequently administered tests so that they can be taken by computer.

ETS administers the tests usually required for entrance into college and post-graduate schools as well as professional tests.

Douglas Becker, Sylvan's president, said the agreement would bring "tens of millions" in annual revenue to the Columbia firm and turn it into an international company. "This literally means we will be setting up operations in 150 countries," he said.

Perhaps more important was the signal that ETS' investment in Sylvan sent regarding its future plans. At some point, the testing service will presumably move to administer its Scholastic Aptitude Test, required by most colleges, by computer, and yesterday's announcement indicates that ETS has the inside track on that business.

"By ETS committing to us as their worldwide partner, it sends a very positive message about their commitment to us and their belief in us," Mr. Becker said.

The testing service is gradually converting its pencil-and-paper tests to an electronic format because of the advantages computers offer in security, flexible schduling and the cost of administering and scoring the tests.

Shares in Sylvan, which went public Dec. 9 at $11, closed yesterday at $18, up 75 cents from Wednesday's close.

Sylvan has been working with ETS since 1991 and last year signed an agreement that made it the exclusive administrator of the Graduate Record Examination and professional tests for nurses and teachers.

ETS said yesterday that it had made an initial investment of $1.5 million worth of stock in Sylvan, giving it about a 1 percent stake in the company. Sylvan said ETS also was granted an option to buy an additional $4 million of stock over the next three years, which could raise its stake to about 3 percent.

Mr. Becker said ETS administers more than a million tests a year outside the United States. The first two exams to be computerized for international use are the Graduate Record Examination and the American Production and Inventory Control Specialists tests. Mr. Becker said he expects others, including the widely used Test of English as a Foreign Language, to follow.

In the first year, Sylvan expects to set up 38 centers in 20 countries. It should extend its reach into more than 150 countries by 1997, the company said.

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