Filing of Certain Prospectuses and Communications in Connection With Business Combination Transactions (425)
April 26 2018 - 4:39PM
Edgar (US Regulatory)
Filed by Capella Education Company
Pursuant to Rule 425 under the Securities Act of 1933, as amended
Deemed filed under Rule
14a-12
under the Securities Exchange Act of 1934, as amended
Subject Company: Capella Education Company
Commission File
No. 001-33140
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Dick:
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Welcome to the April edition of the CU Current. Today I get a chance to sit down with Karl McDonnell who is the CEO of Strayer Education, Inc. Welcome to Minnesota, Karl.
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Karl McDonnell:
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Thanks, Dick. Thank you for having me.
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Dick:
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Oh, for sure. Why dont you tell us a little about yourself, where you grew up, that sort of thing?
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Karl McDonnell:
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Sure. I grew up in Virginia, Southeast Virginia, Hampton Roads, lifeguarded there, was an athlete, was a completely mediocre high school student. Went to a tiny liberal arts college in Norfolk, Virginia, called Virginia Wesleyan,
got a political science degree, and worked my way through school. So, I had a full-time job. I was driving a truck for
Fed-Ex
35-40
hours a week while I was going to
school as well. So, I have some familiarity with what its like to balance a job and try to go to college. Its hard.
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Dick:
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It is hard, isnt it? You spent some time at Epcot Center. What was that experience like?
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Karl McDonnell:
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It was amazing. For five years I worked for the Walt Disney Company down in Florida. I started as basically the food and beverage director of what used to be called the Disney Village Marketplace, which is now called Disney Springs,
and got a huge break a year or so in when I was tapped to be the general manager of Epcot. It was the best job I ever had in my life in terms of fun, could imagine, but it was a lot of work. I didnt have a holiday off for five years because
thats when the parks are busy. Its where I learned to have an eye for detail, attention to detail on things. It was an amazing culture and I still have a lot of friends down there. My children cannot to this day believe that I ever left
Disney, but there were other opportunities that came along.
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Dick:
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Well, youve had a chance to get to know Capella University, Capella Education Company a little bit. Certainly, youre learning about Minnesota today. Here we are in early April with snow.
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Karl McDonnell:
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Snow. Yeah.
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Dick:
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Right. Tell us what youre most excited about with the merger?
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Karl McDonnell:
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I just think that this is two of absolutely the best institutions in America coming together. Weve had such respect for Capella over the years. Weve been big fans of yours, admirers. I would speak at various conferences
and would sometimes be asked, Who do you respect? and I always said, Looks like Capella is first rate institution. What we said about this merger is Capella is really the only institution that we would have an interest in
combining with, and what Im excited about is its a chance to bring two innovative organizations together.
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What weve learned, and which I think is good, is that the innovations are quite different. The opportunity wouldnt be as big if we had by chance just been working on the same stuff, but we havent. You guys are the
best in the world, arguably, at assessment and direct assessment programs. Weve tried to innovate a little bit with artificial intelligence and studio-type content. Theres just so many opportunities to bring that stuff together. Im
nothing but excited about this opportunity.
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Dick:
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Thats great. As you think about the cultures, what do you notice thats the same between the cultures and what do you notice that might be different between the cultures?
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Karl McDonnell:
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Well, whats the same is the DNA of these organizations. Its all about learner success, learner focus. Both organizations are very mission driven, so theres a deep desire to do good. At Strayer, we talk a lot about
how education over time has been the greatest enabler of economic mobility for people, so we see that we have a solemn responsibility to help people succeed and get a better job, get a better life, and its a chance to do all of that at a much
larger scale.
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In terms of whats different, theres simple things; learner versus student, which is a question I get a lot. What are we going to go with? and I think its fine to have both. I think some of our operating
practices are a little different and thats to be expected. Were not planning to just mandate that there be a certain way on every single thing that we can. One of the rationales of the merger was to port over these best practices, so
itd be foolish to walk away from something thats working on one side and not the other. And well work through whatever differences are as constructively as we can, as collaboratively as we can and just try to make sure that
whatever is working continues to work well.
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Dick:
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Great. Tell us a little about the life of the faculty member at Strayer University and what kind of support there is and what that experience is like.
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Karl McDonnell:
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Sure. We have a few hundred full-time faculty members, and like Capella, we also use some amount of adjunct professors. I think if you talk to the faculty members and said, Okay, whats Strayer like? they would say
that, Theres rigorous analytics underpinning our assessment engine. Were looking at student engagement. Were looking at faculty engagement. We want to create an environment where the faculty member can be successful, so
we try to provide the best technology that we can, the best training that we can.
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Interestingly, one of the things that weve learned at Strayer is how important video feedback is to what we call students, what you call learners. So, we have several courses where its mandated that all the feedback be
given to the student in a video format. Students respond to it much more favorably than written feedback. Its more personalized, as you can imagine, and academic achievement rates that we track are
higher.
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So, weve started to think about is this something that we should require all of our faculty members to do, to at least be comfortable giving some amount of recorded video feedback to our learners. Thats something that
were moving towards. For the faculty members that enjoy that, its great. Not everybody enjoys recording videos and well try to be as supportive as we can there. But by and large, I think the faculty are very engaged at Strayer
University, and we see them as the center of everything that we do.
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I look back when I went to college. I dont remember a textbook that I had, but I remember specific faculty members that I had who took an interest in me, who mentored me. And we see that relationship as being the center of any
success that were going to have with our learners or students, is making sure that we can attract the best faculty that we can, that they have the tools that they need to be successful, and that we provide an environment where they can do what
they love to do, which is to teach.
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Dick:
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Thats great. Thats great. Yeah, I agree with you. I remember my faculty members more than I remember the textbooks for sure.
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Karl McDonnell:
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Oh, yeah. No doubt.
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Dick:
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Yeah. Right because its ultimately interpersonal even if its online.
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Karl McDonnell:
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And the best faculty members can push you.
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Dick:
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Exactly.
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Karl McDonnell:
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And light something in you that you want to learn. You find it interesting. I hated math most of my way through high school. Then, I had a couple professors in college who were quite good at statistics or something else, and it just
recast the way I thought about it and fundamentally changed my view of all things math as a result of basically two people.
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Dick:
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Oh, thats great. Thats great so, here we are on the cusp of the merger. We still have to, of course, wait for HLC and a couple other things, but even as you think farther ahead, say five years out, what will people be
saying about Strategic Education and this merger?
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Karl McDonnell:
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Theyre going to look at us as a role model for everything thats right about higher education. Itll be an organization that puts learners at the center of everything that we do. And well be an organization
that is, I believe, innovating more deeply at a much larger scale and faster than any other education institution; all designed to help learners and students fulfill their professional dreams.
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Capella has a strategy of being essentially the enabler of the most direct path between education and a job, and I think thats a terrific strategy. I want to
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make sure that SEI, as we call it, is innovating along that entire ecosystem, that entire learning sort of pathway to degrees, to boot camps, to alternative credentials that we cant even really imagine today. And I hope that
were the role model of how higher education should work and people look to us and say, Those people are doing some really good work.
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Dick:
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Well, it is an exciting time in the history of both organizations and-
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Karl McDonnell:
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No doubt.
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Dick:
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Strayer is 125-
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Karl McDonnell:
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26.
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Dick:
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26?
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Karl McDonnell:
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Yeah, 126 years old.
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Dick:
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Happy Birthday.
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Karl McDonnell:
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Thank you.
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Dick:
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Were just celebrating our 25th anniversary.
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Karl McDonnell:
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Strayer was founded as an organization to help people leave farming jobs and get bookkeeping jobs, basically, at just about the turn of the century. So, its always had a focus on working adults. It started as one campus in
Washington, D.C. Now, of course, we have 80 campuses around the United States.
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Dick:
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Yeah. Thats exciting. Its been exciting to get a chance to sit down and talk with you, and thank you for taking the time to do this.
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Karl McDonnell:
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Yeah. My pleasure. Anytime. Thank you, Dick.
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Forward Looking Statements
This communication contains certain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995 (the
Reform Act
). Such statements may be identified by the use of words such as expect, estimate, assume, believe, anticipate, will, forecast,
outlook, plan, project, or similar words and may include statements with respect to, among other things, the proposed merger of a wholly-owned subsidiary of Strayer with and into Capella, including the expected
timing of completion of the merger; the anticipated benefits of the merger, including estimated synergies; the combined companys plans, objectives and expectations; future financial and operating results; and other statements that are not
historical facts. The statements are based on Strayers and Capellas current expectations and are subject to a number of assumptions, uncertainties and risks. In connection with the safe-harbor provisions of the Reform Act, Strayer and
Capella have identified important factors that could cause Strayers or Capellas actual results to differ materially from those expressed in or implied by such statements. The assumptions, uncertainties and risks include:
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the risk that the merger may not be completed in a timely manner or at all due to the failure to satisfy certain conditions (including obtaining required regulatory and educational agency approvals) to completion of the
merger;
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the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement;
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the outcome of any legal proceeding that may be instituted against Strayer, Capella and others following the announcement of the merger;
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the amount of the costs, fees, expenses and charges related to the merger;
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the risk that the benefits of the merger, including expected synergies, may not be fully realized or may take longer to realize than expected;
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the risk that the merger may not advance the combined companys business strategy and growth strategy;
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the risk that the combined company may experience difficulty integrating Strayers and Capellas employees or operations;
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the potential diversion of Strayers and Capellas managements attention resulting from the proposed merger; and
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other risks and uncertainties identified in Strayers and Capellas filings with the Securities and Exchange Commission.
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Actual results may differ materially from those projected in the forward-looking statements. Strayer and Capella undertake no obligation to update or revise
forward-looking statements.
Additional Information and Where to Find It
Investors and security holders are urged to carefully review and consider each of Strayers and Capellas public filings with the Securities and
Exchange Commission (the SEC), including but not limited to their Annual Reports on Form
10-K,
their proxy statements, their Current Reports on Form
8-K
and
their Quarterly Reports on Form
10-Q.
The documents filed by Strayer with the SEC may be obtained free of charge at Strayers website at www.strayereducation.com, in the Investor Relations tab
at the top of the page, or at the SECs website at www.sec.gov. These documents may also be obtained free of charge from Strayer by requesting them in writing to 2303 Dulles Station Boulevard, Herndon, VA 20171. The documents filed by Capella
with the SEC may be obtained free of charge at Capellas website at
www.capellaeducation.com
, in the Investor Relations tab at the top of the page, or at the SECs website at www.sec.gov. These documents may also be
obtained free of charge from Capella by requesting them in writing to 225 South 6th Street, 9th Floor, Minneapolis, Minnesota 55402.
In connection with
the proposed transaction, on November 20, 2017, Strayer filed a registration statement on Form
S-4
with the SEC which included a joint proxy statement of Strayer and Capella and a prospectus of Strayer.
The registration statement was amended on December 8, 2017. On January 19, 2018 at their respective special meetings, Strayers stockholders approved the issuance of Strayer common stock and the amendment and restatement of
Strayers charter, each in connection with the merger, and Capella shareholders approved the Agreement and Plan of Merger, dated as of October 29, 2017, by and among Strayer, Capella and Sarg Sub Inc. BEFORE MAKING ANY VOTING OR INVESTMENT
DECISION, INVESTORS AND SECURITY HOLDERS OF STRAYER AND CAPELLA ARE URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders can obtain the registration statement and the joint proxy statement/prospectus
free of charge from the SECs website or from Strayer or Capella as described above. The contents of the websites referenced above are not deemed to be incorporated by reference into the registration statement or the joint proxy
statement/prospectus.
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No Offer or Solicitations
This document shall not constitute an offer to sell or buy or the solicitation of an offer to buy or sell any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933.
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