UPDATED: With U of I deal in limbo, Phoenix seeks to talk to other buyers

(UPDATED, 3:26 p.m., with statements from the University of Phoenix and the University of Idaho.)

With its deal with the University of Idaho in limbo, the University of Phoenix could begin entertaining new offers.

Phoenix’s owners, Apollo Global Management, have floated the idea of non-exclusivity. Apollo and the U of I would continue to discuss a $685 million purchase that has been in the works for more than a year. In exchange, Apollo would have the go-ahead to negotiate with other would-be buyers — and possibly pay the U of I “breakup fees” if its deal doesn’t come to fruition.

The Phoenix-U of I affiliation was thrown into jeopardy in March, when the state Senate rejected a bill designed to restructure the purchase and alleviate lawmakers’ concerns. Since then, the parties have said little publicly about a possible purchase. But they have been quietly talking about non-exclusivity for at least a month, according to State Board of Education emails, obtained by Idaho Education News through a public records request.

April 21: In an email to board members, State Board Executive Director Matt Freeman recapped a closed-door discussion involving U of I President C. Scott Green, general counsel Kent Nelson, State Board member Kurt Liebich and Matt Reiber, an aide to Gov. Brad Little. The email elaborates greatly on Green’s public comments at the State Board’s meeting that week — in which he said the U of I has “a couple different paths” to keep the deal afloat.

“A strawman proposal being considered is that Apollo would extend the deadline to close on the transaction by 9-12 months. In return, we would drop exclusivity. If Apollo ended up selling Phoenix to another buyer, there would be a breakup fee paid to UI. If the asset was never sold, there would be a breakup fee of a lesser amount paid to UI. The breakup fee would help offset due diligence costs incurred by UI.”

May 3: Freeman writes about a May 1 meeting with Little and a couple of his staff members. “We agreed we need state policy leaders to signal whether they even want to move forward with the underlying transaction or not. The governor is going to have some informal conversations and follow up with us.”

Little’s office and the State Board did not respond to requests for comment.

In a statement issued Tuesday afternoon, Phoenix confirmed its interest in negotiating with other parties — but said it wants to continue talking with the U of I. “We are optimistic that we can find a path forward with the University of Idaho and look forward to continuing discussions with leaders in the state.”

In a statement Tuesday, the U of I struck a similar tone. “We continue to have conversations with the governor and legislators about their interest in continuing to pursue this opportunity for our state.”

Meanwhile, one looming but nonbinding deadline has been pushed back.

Under their original purchase agreement, either party could walk away from the bargaining table on May 31 — Friday — by providing written notice to the other party.

“Buyer and seller have agreed that neither will be giving that notice through June, while amendments to the agreement are discussed,” the U of I said Tuesday.

The U of I-Phoenix affiliation first came into public view just over a year ago. On May 18, 2023, the State Board gave the purchase the green light — in a 90-minute public hearing that came after a string of closed-door meetings.

Phoenix and the U of I had hoped to close the deal in early 2024. But political and legal obstacles have delayed the process.

University of Idaho President C. Scott Green fields questions about the proposed University of Phoenix purchase during a Feb. 28 legislative hearing. (Kevin Richert/Idaho EdNews)

Complaining that they were cut out of the behind-the-scenes negotiations, lawmakers pushed back during the 2024 session. The Senate vote appeared to all but kill the Phoenix purchase — although Green has publicly maintained that the deal remains viable.

Meanwhile, Attorney General Raúl Labrador has sued the State Board over its closed-door discussions, saying the series of executive sessions violated open meetings law. Ada County District Judge Jason Scott sided with the State Board in January. Labrador has appealed to the state Supreme Court, and oral arguments are scheduled for June 13.

The ongoing lawsuit, filed in June, has prevented the U of I from selling bonds to bankroll a Phoenix purchase.

U of I officials have maintained that the Phoenix purchase could remake online education in rural Idaho — and provide a steady stream of revenues from a profitable partner. The U of I has minimized the purchase’s financial risks, totaling up to $9.9 million a year, or $50 million total.

Meanwhile, the U of I has spent $11 million on due diligence reviews of the purchase, with the bulk of that money going to Green’s former employer, an international law firm. The proposed “breakup fees” would be designed to offset these costs, according to Freeman’s April 21 email.

This is a developing story. Check back for updates.

More reading: Click here for more of our in-depth and exclusive coverage of the Phoenix proposal.

Kevin Richert

Kevin Richert

Senior reporter and blogger Kevin Richert specializes in education politics and education policy. He has more than 30 years of experience in Idaho journalism. He is a frequent guest on "Idaho Reports" on Idaho Public Television and "Idaho Matters" on Boise State Public Radio. Follow Kevin on Twitter: @KevinRichert. He can be reached at [email protected]

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