Sale swells Sylvan coffers

Computer-based testing division nets $600 million

Seed money

March 07, 2000|By William Patalon III | William Patalon III,SUN STAFF

Baltimore-based Sylvan Learning Systems Inc. said yesterday that it completed the sale of its computer-based testing division, a $775 million deal that will provide the seed money for a new Internet incubator fund the company is starting with the help of outside investors.

The testing division, Sylvan Prometric Inc., was purchased by the Thomson Corp. of Canada in a sale that was projected to net Sylvan Learning about $600 million -- or $12 per share -- in cash after taxes and transaction fees. Sylvan Learning's shares closed yesterday at $16.50, up 43.75 cents.

The sale was billed as good for both Sylvan Prometric and for Baltimore. It's good for Sylvan Prometric because Thomson is a deep-pocketed parent bent on using its substantial assets to bulk up its Internet and other multimedia holdings. And it was said to be good for Baltimore because, as a condition of the sale, Thomson agreed to leave Sylvan Prometric's headquarters here, where about half of the unit's 1,400 workers are located.

Over the long run, the real victor could turn out to be Sylvan Learning, which announced plans Feb. 24 to start a $500 million venture capital fund to "incubate" -- start -- educational companies organized around the Internet.

"We are very excited as we move forward with our new strategy that we believe allows for growth and profitability of Sylvan's operating companies while establishing the leadership position in the Internet market for education and training," said Douglas Becker, Sylvan Learning's chairman and chief executive officer. "Our goal is to become the `clicks-and-mortar' leader in the education industry."

The company said it will commit about $220 million of the net proceeds from the Prometric sale to the new incubator fund. Apollo Management LLP, a well-known venture-capital firm, is putting $100 million into the venture, Sylvan said, adding that it intends to seek a like amount from another outside investor. An Internet professional services firm, Rare Medium Group Inc., has signed on to invest an undisclosed sum.

Sylvan is also contributing assets to the incubator.

The online venture won't be the only company business benefiting from an infusion of money. Sylvan's international university initiative, which the company says is showing promise, will receive $100 million of the proceeds, Becker has said.

Sylvan operates Universidad Europea in Madrid, Spain, and would like to add more -- either buying and expanding existing schools or starting new ones from scratch, the company has said.

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