Advisory Board Adds Royall to its Higher Education Lineup

The Advisory Board Company (ABCO) has announced the completion of its Royall & Company takeover. Royall is a higher education industry leader in strategic, data-driven student engagement and enrollment management solutions.

The transaction will help Advisory Board Company to enhance its higher education business through a highly recurring revenue model. With the addition of Royall, the company can now become a distinctive and leading provider of exceptional insight, analytics and value across a student’s full lifecycle.

The purchase price of Royall was $850 million, consisting of $750 million in cash and $100 million in Advisory Board stock.

In order to finance the transaction, Advisory Board closed $775 million of new senior secured credit facilities. The balance amount will be used for general corporate purposes.

Advisory Board wants to retain some of the employees of Royall with vast experience and expertise in the industry. In this regard, the company will give out equity awards to around 60 employees of Royall.

The acquisition will be accretive to the overall financial profile of company and will enhance its growth, earnings, cash flow, and non-GAAP earnings. Advisory Board expects the transaction to be approximately 10 cents accretive to calendar 2015 non-GAAP earnings per share. Combined business yields’ pro forma trailing 12 months revenue and adjusted EBITDA are expected at $664 million and $143 million, respectively.

Advisory Board carries a Zacks Rank #1(Strong Buy). Other stocks worth considering include AMN Healthcare Services Inc. (AHS), BG Medicine, Inc. (BGMD) and Cancer Genetics, Inc. (CGIX). All these stocks carry a Zacks Rank #2 (Buy).