Sylvan buying Philadelphia tutoring firm

January 10, 1995|By Kim Clark | Kim Clark,Sun Staff Writer

Sylvan Learning Systems Inc. announced yesterday that it had signed a letter of intent to purchase Remedial Education and Diagnostic Services Inc., a Philadelphia-based company that provides tutoring to parochial school students.

The agreement calls for Sylvan to pay $6 million in stock for READS.

READS, a privately held firm founded in 1975, earned about $800,000 on revenues of about $5 million in 1994, Sylvan said.

READS specializes in servicing contracts with public school systems that use federal funds to provide remedial tutoring to disadvantaged children enrolled in parochial schools.

Many cities hire private tutoring companies for these parochial students to make sure they don't run afoul of laws separating the government from religious organizations, Sylvan said. Sylvan said it expected the acquisition to be completed by March 31 pending a further examination of READ's finances.

Sylvan President Douglas Becker described the proposed purchase as "a strategic expansion" for the Columbia-based student tutoring company. Sylvan has specialized in private, after-school tutoring as well as providing tutoring help to public school systems such as Baltimore's. Mr. Becker said Sylvan plans to buy other companies "that would bolster our presence" in the parochial school and workplace tutoring markets.

George Stricker, READS' president, and Stephen Freeman, READS' general manager, will head Sylvan's efforts in the nonpublic Chapter 1 marketplace.

Willard Brown, who follows Sylvan's stock for C.L. King & Associates in Albany, N.Y., said the deal sounded like a good one for Sylvan, since it gives the company an entry into the parochial school market.

"It sounds like it was appropriately priced, but the real key is does it grow?" Mr. Willard said. "The key here is that Sylvan has got to expand away from its 'Mother Earth' territory of Washington-Baltimore-Philadelphia," he said. Sylvan reported earning $2.2 million on sales of $28.3 million in the first nine months of 1994. Its stock closed unchanged yesterday at $18.75.

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