ProQuest Acquires Voyager Learning
DALLAS, Tex. (Feb. 01, 2005) - Best Associates announced Tuesday that Voyager Expanded Learning, co-founded by chairman Randy Best and Admiral Thomas B. Hayward, has been acquired by ProQuest Company, a leading electronic publisher for the education and automotive markets.
ProQuest acquired Voyager for $340 million in cash and approximately $21 million of ProQuest Company stock.
"I am pleased that the innovative work that went into making Voyager a leader in quality learning programs will be continued by a company with ProQuest's stellar credentials, "Mr. Best said. "ProQuest's expertise in educational excellence is a good fit with Voyager and will bring significant benefits to our country’s school children."
Alan Aldworth, chairman and chief executive officer of ProQuest Company, stated, "In building our education company, a strong foundation is essential for sustainable growth. Voyager is the platform on which we will continue to build the K-12 business we've been carefully developing over the last few years with the acquisitions of SIRS, Reading A-Z and CultureGrams. With the proven efficacy of its products, Voyager Expanded Learning is an important acquisition for ProQuest because it establishes our position in the K-12 curriculum market."
Product Opportunities
According to a recent industry report, standards-based curriculum accounts for one of the most significant revenue opportunities in the K-12 market. Within that market, the demand for products with proven efficacy like Voyager's is very strong. As the scope of the No Child Left Behind Act (NCLB) expands to include new subject areas, Voyager can quickly respond with products such as the math intervention product ready to be introduced in 2005.
As a result of the new emphasis on accountability in NCLB, increased federal funds have been allocated to K-12 education. More than $38 billion is expected to be allocated to U.S. schools in 2005 under programs focused on various subjects.
Reading
The 2005 U.S. federal budget contains over $1.0 billion in funding for the NCLB's Reading First initiative. Under this initiative, states are required to use scientifically based research to provide high-quality reading instruction for grades K-3. Voyager Learning's reading curriculum and intervention programs are scientifically based and proven effective by independent studies. Voyager students outperform students not enrolled in Voyager when important reading skills that form the basis for the Reading First legislation are evaluated. Its programs have been identified as eligible to be paid for by states using Reading First funding.
Teacher Professional Development
Nearly $3 billion has been allocated in the 2005 federal budget for grants to improve teacher quality. Research consistently shows that quality of instruction is the most critical element in determining the level of student learning, especially for struggling readers. Voyager's profitable, scalable professional development model, VoyagerU, introduces ProQuest Company to this new, highly fragmented market niche.
Math
While NCLB is currently devoting a large amount of funding to reading, the spotlight is expanding to include math. Voyager has developed a math intervention product for grades 3-8 which will be introduced in 2005. It is designed to help students struggling with basic math skills.
Financial Details
Under the terms of the agreement, ProQuest acquired the stock of Voyager for $340 million in cash and approximately $21 million of ProQuest Company stock.
The cash portion of the payment was financed through a new issuance of private-placement notes, and a new revolving line of credit. The 5.38 percent fixed notes mature in January 2015. The company's previous revolving credit agreement was replaced with a new agreement with capacity of $275 million and an expiration date of January 2010.
"Voyager's growing revenues, strong operating margins and low capital expenditures generate significant free cash flow. This will allow us to comfortably support this increased debt level, with no adverse effect on our investment grade status with our lenders, or our investment grade credit statistics," said Kevin Gregory, senior vice president and chief financial officer of ProQuest Company.
ProQuest may pay up to $20 million in additional consideration based on Voyager's operating results from April 1, 2005, through March 31, 2006.
Management
Voyager's senior management team has remained with the company and will report to Ron Klausner, president of ProQuest Information and Learning and acting president of Voyager Expanded Learning. Voyager's headquarters will remain in Dallas, Texas.
"ProQuest and Voyager share a deep commitment to improving K-12 education through innovative products used in the library and the classroom," said Klausner. "We are excited about this opportunity to extend Voyager's reach to additional school districts, grades, students, and curriculum areas," Klausner added.
About ProQuest Company
ProQuest Company (NYSE: PQE) is based in Ann Arbor, Mich., and is a leading publisher of information solutions for the education, automotive and power equipment markets. Proquest provides products and services to its customers through two business segments: Information and Learning, and Business Solutions. Through its Information and Learning segment, which primarily serves the education market, Proquest collects, organizes and publishes content from a wide range of sources including newspapers, periodicals and books. Proquest's Business Solutions segment is primarily engaged in the delivery, in electronic form, of comprehensive parts and service information to the automotive market. Its products transform complex technical data, like parts catalogs and service manuals, into easily accessed electronic information. For the world's automotive manufacturers and their dealer networks, ProQuest also secures business-to-business information and retail performance management services. ProQuest Company was recently named one of the nation's 200 best small companies by Forbes magazine, and one of the 100 fastest growing technology companies in the United States by Business 2.0 magazine.
About Voyager Expanded Learning
Voyager Expanded Learning is based in Dallas, Texas. Voyager is a provider of in-school reading programs, reading intervention programs and professional development programs for school districts throughout the United States. Creating the first comprehensive reading system to assure success, the Voyager Universal Literacy System® warrants that students who enter the System in kindergarten will read at grade level by the end of third grade. Founded in 1994, Voyager has delivered extended-time reading and basic skills intervention programs to more than 1,000 school districts and large-scale reading programs in cities such as Dallas, Phoenix, New York, Philadelphia, and the District of Columbia, resulting in dramatically improved student performance. Partnerships and collaborations with Discovery Channel, Smithsonian Institution, and NASA enable Voyager to provide timely and powerful curricula for the American classroom. More information can be found online at voyagerlearning.com.
About Best Associates
Best Associates is a privately owned merchant banking institution headquartered in Dallas, Texas, with related activities throughout the United States and abroad. The firm provides capital to growth-oriented businesses, initiates start-ups and makes acquisitions in targeted industry segments. Best Associates has longtime relationships in several industry sectors. They include education, specialty foods, health care, real estate and energy. Acting as a principal, the firm uses its capital, contacts and management resources to identify investment opportunities and to assist its partners and portfolio companies with their financial requirements. The firm’s activities include originating and structuring transactions, direct investment, and recruiting, supporting and advising the management of associated entities. Currently, Best Associates represents outside investors in multiple transactions, and it is continually evaluating new investment opportunities. More information can be found online at bestassociates.com.
For more information about ProQuest, go to www.proquestcompany.com/news
For more information about Best Associates, contact:
Tom Evans
2200 Ross Avenue
Suite 3800
Dallas, Texas 75201
214-438-4100
contact@bestassociates.com