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Sylvan to buy English school $65 million is price for ASPECT Inc. of San Francisco; Education

THE BALTIMORE SUN

Continuing its foray into international education services, Baltimore-based Sylvan Learning Systems Inc. said yesterday that it will pay $65 million for a company that provides English instruction.

ASPECT Inc., based in San Francisco, is a privately held provider of English as a second language programs for college-age students. None of the company's 282 employees will lose their jobs, Sylvan said.

In 1997, ASPECT reported revenue of $52 million.

"For several years now, as Sylvan has become more international, we've found that English language instruction is a consistent need in every country," said Douglas L. Becker, Sylvan's co-chief executive officer. The company has operations in about 100 countries.

ASPECT's president, Tom Ericsson, will remain with the company to manage the business. "We've talked with a lot of potential strategic partners for six months, but we were always most interested in Sylvan," Ericsson said. "Sylvan can give us a competitive advantage, and the company's ambition is very appealing."

Founded in 1982, ASPECT delivers English language programs at 19 schools in five countries -- nine schools are in the United States, six in the United Kingdom, two in Canada and one each in Australia and Ireland. ASPECT students from 90 countries around the world come to the schools for an immersion experience, Ericcson said.

The ASPECT deal is akin to Sylvan's purchase last year of Wall Street Institute, a Spanish company that offers English language instruction in 170 centers in Europe and Latin America. WSI is geared toward professionals who study in their own countries on a part-time basis.

David Nadel, an analyst with Bear, Stearns & Co. in New York, estimates the English as a second language market to be about $1 billion and said it should be a good segment for Sylvan.

"It's an attractive part of the very large education market, but it has a very limited number of quality providers," Nadel said. "ASPECT is one of them."

In the transaction, Sylvan is to issue common stock valued at $65 million. The number of shares issued is to be based on the average trading price of Sylvan stock for the 30 days prior to the closing date, which is expected to occur before May 15.

Sylvan shares dipped 6.25 cents to $48.4375 yesterday.

Sylvan plans to take a charge of about $10 million in its second quarter 1998 earnings to pay for the acquisition.

ASPECT is expected to be neutral to Sylvan's earnings this year and accretive in future years, Sylvan said. That means that the Baltimore company is getting a good price for its acquisition, said Scott L. Soffen, education analyst with Legg Mason Wood Walker Inc. in Baltimore.

"The fact that Sylvan can buy a company and immediately help its earnings suggest it didn't pay too much for ASPECT," he said.

Pub Date: 4/14/98

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