Education Co. Draws Giant Consortium

Target: Laureate Education Inc.

Price: $3.8 billion

Sponsors: In order of size: Kohlberg Kravis Roberts & Co., Citigroup Private Equity, S.A.C. Capital Management LLC, SPG Partners, Bregal Investments, Caisse de depot et placement du Quebec, Sterling Capital, Makena Capital, Torreal S.A. and Southern Cross Capital

Financial Advisor: Buyers: Citigroup and Goldman Sachs

Legal Counsel: Buyers: Simpson Thacher & Bartlett LLP and Katten Muchin Rosenman LLP

Hedge funds and LBO firms appear to have tripped over one another to get a piece of Laureate Education Inc.

Led by the company’s chief executive, Gordon “Jeff” Becker, a consortium of 10 firms has agreed to pay an enterprise value of $3.8 billion, $60.50 per share, to take Laureate Education private. As of Sept. 30, 2006, Laureate Education had outstanding debt of $463.9 million. The Baltimore-based company operates campus-based and online universities in Latin America, Europe and Asia.

The consortium is led by Kohlberg Kravis Roberts & Co. and includes—deep breath—in order of investment size: Citigroup Private Equity, S.A.C. Capital Management LLC, SPG Partners, the Brenninkmeijer family-owned Swiss investment company Bregal Investments, Caisse de depot et placement du Quebec, Sterling Capital, Makena Capital, the Abello family-owned Spanish investment company Torreal S.A., and Southern Cross Capital.

It may well be the largest-ever team of buyout firms to combine for an equity stake in an LBO, though a few of the players will likely take passive roles. Citigroup Private Equity is habitually a passive co-investor, as is Caisse de depot et placement du Quebec. Two hedge funds in the consortium, Makena and S.A.C. Capital, the secretive hedge fund run by Steven A. Cohen, aren’t known for taking part in LBOS.

Each of the firms involved in the Laureate Education deal declined to comment, except for the Caisse de depot et placement du Quebec. The pension “only has a small part in that deal. It is not a major partner in the consortium,” said a spokeswoman.

Becker approached the board about a sale in September of last year. He made three offers before a special committee of Laureate Education’s board accepted his fourth of $60.50 per share, according to a press release put out by the company.

Citigroup and Goldman Sachs served as financial advisors to buyers of Laureate Education. Simpson Thacher & Bartlett LLP and Katten Muchin Rosenman LLP provided them legal counsel.

Laureate Education announced its buyout one day before a second Baltimore education company, Educate Inc., announced it had agreed to sell to an LBO group containing some of the same members: Sterling Capital Partners and Citigroup Private Equity. Those two firms have agreed to buy Educate Inc. for $8 per share, or roughly $535 million, including assumed debt. The selling shareholders will include the Apollo Group, which holds a majority stake in Educate.

Other education deals in 2006 include Thoma Cressey Equity Partners’s purchase of Excelligence Learning Corp. in the fourth quarter for $150 million; Veronis Suhler Stevenson’s second-quarter purchase of Granada Learning for $92 million; American Capital Strategies’s second-quarter purchase of Primrose Holdings for $63 million; and Charlesbank Capital Partners’s and Silverhawk Capital Partners’s first quarter purchase of Worldstrides for $210 million.—E.B.