Gryphon, Cadigan Fuel $110M MBO For Nobel Learning –

In a move that was long rumored, Nobel Learning Communities agreed to sell to an investor group led by some of its management and private equity firms Gryphon Partners and Cadigan Investment Partners.

The investor group will pay $7.75 in cash for each Nobel share and assume about $52 million in debt in taking the for-profit grade school operator private, for a total value of $110 million.

On the day of the agreement, Nobel shares closed at $5.85, below its 52-week high of $9.00. Although Nobel Learning claims to be one of the very few school operators in the K-12 segment of the industry whose business is profitable, its stock languished behind other less profitable competitors.

As far back as March, there were reports that Nobel boss Jack Clegg, who holds the titles of chairman, CEO and chief operating officer, was mulling a buyout and discussing financing with lenders. Clegg owns a reported 10.3% of the company.

For Jeffrey Ott, Partner of Gryphon Partners II, and Michael Tokarz, chairman of Cadigan, it was Clegg’s vision backed by a solid management team that made the difference.

Tokarz, a former general partner at Kohlberg Kravis Roberts & Co., said, “the level of experience of the management team coupled with the integrity of the company’s mission is what attracted us.”

Recent acquisitions by Cadigan over the past 12 months include a $130 million leveraged buyout of American Coin Merchandising Inc., the leading U.S. operator of amusement vending equipment; and the $60 million management buyout of La Madeleine Inc., the leading French bakery cafe chain in the Southeast.

Nobel Learning owns and operates 176 schools in 15 states, including pre-elementary schools, elementary schools, middle schools, high schools, charter schools and schools for learning challenged children with the capacity to educate 27,000 children. In June, it announced that 11 new schools would open this summer across several states.

The acquisition is expected to be completed during the second quarter of fiscal year 2002-2003 and is subject to approval by a majority of the company’s stockholders, the availability of certain financing, the expiration of the applicable waiting period under the Hart-Scott Rodino Act and other customary conditions.

For the nine months ended March 31, 2002, Nobel’s revenues increased 6% to $115.1 million from the comparable nine-month period. Net income totaled $1.4 million from $538,000.