Baltimore-based Sylvan Ventures LLC, a subsidiary of Sylvan Learning Systems Inc., said yesterday that it will invest $32.8 million in Walden University, a Minneapolis-based distance-learning college, in exchange for a 41 percent ownership stake in the school.
Walden also announced yesterday that it is teaming up with another Sylvan Learning Systems subsidiary, Canter and Associates, to offer students a master's degree program in education, specializing in elementary reading and literacy.
"It's a win-win for both of us, really; Sylvan brings to the table an enormous reach across the whole educational spectrum," said Bob Scales, chief executive officer of Walden University. Walden brings a reputation for excellence and its accreditation, he said.
Douglas Becker, chairman and CEO of Sylvan Learning Systems, a Baltimore-based education services business, said the company had long been seeking an online university in which to invest. But finding a recognized university that was fully accredited was a challenge, he said, and Walden is one of a handful that has accreditation without bricks and mortar.
For its ownership stake in Walden University, Sylvan Ventures will pay the $32.8 million over the next 18 months.
Scales said officials aren't certain what the money will be used for but that it will be integrated into Walden's programs.
"For a venture fund to get 41 percent of a profitable organization seems like a tremendous, tremendous move," said Peter Martin, who follows Sylvan for Jefferies & Co. Inc. in San Francisco.
The deal gives Sylvan a point of distribution for its programs, he said.
"They can now look at expanding their teacher education and certification program from Canter, and they can also look at some of the degree programs from the Sylvan international universities," Martin said.
Becker said the investment in Walden complements Sylvan International Universities, a division the company started in 1999 when it took a controlling interest in Universidad Europea de Madrid, a large private university in Spain.
Walden, he said, can become a resource center for Sylvan's international universities on the subject of online learning.
"We will own a very large percentage of this company," Becker said, "so this is not a casual investment for us."
Walden was founded in 1970 as a distance-learning school. Before the Internet, the school taught distance-learning classes using mail and the telephone to communicate with students. Walden, where students' average age is 45, offers master's degrees and doctorates.
Canter and Associates runs distance-learning graduate courses and degree programs for kindergarten through 12th-grade teachers at 16 universities.
The partnership with Walden will give the university more students so that it can grow, and it will allow Canter to offer its classes to a student body stretching beyond the regions served by its current partners.
"What we will be able to do is give them sort of unlimited national reach," Scales said.