A year ago, the University of Idaho announced its plan to spend over half a billion dollars to acquire a mostly online university that had significantly declined in quality.
The deal to buy the University of Phoenix seemed like a sure thing, with approval being obtained through private discussions with the Idaho State Board of Education. However, the University of Idaho has not been successful in gaining support for the deal from state lawmakers, who were not involved in the decision-making process.
The original deadline for either party to walk away from the proposed $685 million purchase expired on Friday. However, the purchase faced legal challenges from state lawyers and failed to get support in the Idaho Legislature.
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However, the agreement is still possible. According to UI spokeswoman Jodi Walker, the University of Phoenix’s owner, Apollo Management Group, and UI officials will keep negotiating even after the Friday deadline. “Both sides have agreed, through their general counsels, to continue talking until at least June without ending the discussions,” she said.
Apollo chose not to provide a comment on Friday. Emails obtained by Idaho Education News reveal that the owners of the University of Phoenix are interested in considering other offers to purchase the institution.
In an email sent on April 21, Executive Director Matt Freeman of the state board described a private discussion that took place between UI President C. Scott Green, general counsel Kent Nelson, another member of the state education board, and an aide to Idaho Governor Brad Little.
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Freeman explains that both sides will keep negotiating the purchase for up to a year if Idaho agrees to stop having exclusive rights. “If Apollo sells Phoenix to another buyer, they would have to pay a breakup fee to UI,” Freeman wrote.
If the asset is not sold, UI would receive a smaller breakup fee. The breakup fee would help cover the costs of investigating UI before the breakup.
The “breakup fee” would help cover the $11 million that UI reportedly spent on trying to purchase the online university based in Phoenix. Last year, there were approximately 85,000 students.
Out of the $11 million, approximately $7.3 million was given to the international law firm Hogan Lovells. Hogan Lovells has offices in London and Washington, D.C.
Green was previously the global chief operating and financial officer for Hogan Lovells. In the summer of 2019, he was hired by the Idaho State Board of Education to become Idaho’s 19th president.
At least one Idaho lawmaker criticized Green for hiring his former firm to do the necessary research on the deal.
“Green hired Hogan Lovells, the best law firm he knew of that specialized in the subject matter,” said Walker.
During the recent legislative sessions, Green tried to persuade lawmakers about the benefits of UI’s plan to buy the University of Phoenix.
However, he faced concerns about whether buying the school would harm the state’s credit rating. People also questioned why Idaho should buy a school with a bad reputation that used to have 470,000 students but has been losing students.
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