Capella Buys U.K. Online Education Co. for $14.9M

The company, Resource Development International, develops and delivers online higher-education programs across the U.K.; its 2010 fiscal-year revenue totaled about $13.9 million, and Capella's CEO sees it as a business with "significant opportunity for long-term growth."

Capella Education Company-which operates Capella University-paid about $14.9 million to acquire a U.K.-based company that serves as an independent provider of distance learning qualifications.

The company, Resource Development International, Ltd. (RDI), partners with universities in the U.K. to develop and deliver higher-education programs, predominantly through online courses. Its 2010 fiscal-year revenue totaled about $13.9 million.

According to Capella spokesman Mike Buttry, RDI has four offices-two in the U.K., one in Hong Kong, and one in Florida. Last quarter, RDI sold 3,300 courses to students, although some students took more than one course.

Following the acquisition, international students will be able to enroll in courses through either Capella University, which will continue to offer U.S. degrees, or RDI, which will continue to offer U.K. degrees. Course offerings through both entities are offered online.

Capella said that RDI recently applied to the British government for “Taught Degree Awarding Powers.” It's a designation that would allow the company to independently validate its own degrees under a governmental body that reviews standards and quality of all U.K. universities. RDI degrees are now validated by its partner brick-and-mortar universities in the U.K.

“We are excited about the opportunity to serve the large and growing international learner population through RDI's online platform and strong academic credentials,” Kevin Gilligan, Capella Education Company's chairman and CEO, said in a statement.

Gilligan called the acquisition of RDI a business with “significant opportunity for long-term growth.”

Buttry said that the acquisition of RDI is the first of its kind that Capella-which serves students in 59 countries-has made. He declined to comment on whether there could be additional acquisitions of a similar type in the coming months, but he said that the acquisition and its impact on Capella will likely be addressed in the company's second-quarter conference call with investors on July 26.

The acquisition was financed with cash on hand, and Capella said that it is expected to be accretive to earnings by 2013 and “modestly dilutive” in 2011 and 2012.

Under the terms of the purchase agreement, Capella will pay an additional sum-approximately $6.5 million-if RDI receives the “Taught Degree Awarding Powers” designation it's seeking.

Capella University now offers 44 graduate and undergraduate degree programs with 136 specializations. As of March, nearly 40,000 online learners were enrolled.

Capella Education Company is among Minnesota's 60-largest public companies based on revenue, which totaled $426.1 million in 2010.