Here's What Happens If Apollo Education Goes Private

If Apollo Education Group Inc

becomes a private company, there may be "substantial" legal/regulatory challenges, according to analysts at Piper Jaffray. Piper Jaffray analysts noted in a research note Tuesday that there would be a "significant barrier" for consolidation in the industry. "While our valuation analysis suggests meaningful potential upside in a go-private transaction, we note that legal and regulatory considerations create a meaningful challenge to closing a transaction," the firm commented. The firm's PT for APOL is unchanged at $9. Piper Jaffray maintained a "Neutral" rating for the stock due to factors considered such as the "significant regulatory hurdles" to closing the transaction and underlying fundamentals which remain "weak." Apollo does have a chance of overcoming the regulatory, financial, and legal challenges to finalize its sale transaction, and Piper Jaffray believes the company's valuation upside "could be meaningful" if the challenges are addressed. " Department of Education and accreditor approval will be required for a change in control and both sets of regulators have shown reticence to approve transactions involving acquisitions by for-profit enterprises," the firm noted. "Given a lack of recent precedent transactions, it is difficult to put probabilities on a transaction closing, despite economics that look appealing." Shares of APOL rallied by 1.7 percent during the past week, however the stock fell 6.51 percent on a 4-week basis. The stock has outperformed the S&P 500 by 0.29 percent in the past week, with outperformance increases to 1.05 percent for the last 4 weeks. APOL shares fell 26.79 percent during the last 3-month period.