A year ago, the University of Idaho announced that it wanted to spend more than a half-billion dollars to purchase a mostly online university that was a shadow of its former self.
While the deal to purchase the University of Phoenix was made to sound like a slam dunk, including securing approval through secret discussions with the Idaho State Board of Education, the UI has largely failed to garner support for the deal from state lawmakers who were left out of the decision process.
As the proposed $685 million purchase faced legal challenges from state lawyers and failed to get support in the Idaho Legislature, the original deadline for either party to walk away from the deal expired on Friday.
However, the deal is not yet dead.
UI spokeswoman Jodi Walker confirmed that Apollo Management Group, which owns the University of Phoenix, and UI officials will continue negotiating following the Friday deadline.
“Both sides have agreed, through their general counsels, not to walk away through at least June while they continue conversations around an extension,” she said.
Apollo declined to comment Friday.
Emails obtained by Idaho Education News, a nonprofit news organization based in Boise, show that the University of Phoenix owners want to entertain other purchase offers.
In an April 21 email to other board members, state board Executive Director Matt Freeman described a closed-door discussion between UI President C. Scott Green, general counsel Kent Nelson, another state education board member and an aide to Idaho Gov. Brad Little.
In it, Freeman explains that both sides will agree to continue negotiating the purchase for up to a year as long as Idaho agrees to drop exclusivity. “If Apollo ended up selling Phoenix to another buyer, there would be a breakup fee paid to UI,” Freeman wrote.
“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.”
It appears that “breakup fee” would help cover the $11 million UI reportedly spent on trying to land the deal to purchase the online university, which is based in Phoenix. As of last year, it had about 85,000 students.
Of that $11 million, about $7.3 million went to international law firm Hogan Lovells, which has headquarters in London and Washington, D.C.
Green worked as global chief operating and financial officer for Hogan Lovells until the summer of 2019 when the Idaho State Board of Education hired him as Idaho’s 19th president.
Green’s hiring of his former firm to perform due diligence on the deal was criticized by at least one Idaho lawmaker.
“He hired the best law firm that he knew of that were the experts in the subject matter,” Walker said of Green’s hiring of Hogan Lovells.
Green attempted to convince lawmakers during the recent legislative sessions of the merits of UI’s proposal to purchase the University of Phoenix.
However, he battled concerns over whether the purchase would imperil the state’s credit rating and why Idaho should purchase a school with a bruised reputation that once had 470,000 students before it began to shed enrollment.
The announcement in 2023 from Idaho’s purchase effort came four years after the owners of University of Phoenix agreed to pay $191 million to settle claims made by the Federal Trade Commission that it used “deceptive advertisem*nts falsely touting their relationships and job opportunities with companies such as AT&T, Yahoo!, Microsoft, Twitter, and The American Red Cross.”
“The monetary judgment is the highest in an FTC case involving a for-profit school,” according to the commission’s website.
A telling exchange of Green’s challenges occurred earlier this year when he told lawmakers that because of the nature of the deal, he had no “political mechanism” for the university to give lawmakers advance word of it.
House State Affairs Committee Chairman Brent Crane, R-Nampa, responded: ”I have a cell phone and I have a laptop.”
Despite lobbying from the owners of University of Phoenix, and Green’s cajoling, state lawmakers never warmed to the deal.
In fact, they passed a bill that didn’t directly mention the University of Phoenix deal, but nonetheless would have prevented its purchase if it had been in place.
House Bill 691, which was signed into law by Little, now requires state-funded agencies and institutions to notify the Legislature and local media before most purchases of $25 million or more.
Despite the blowback from lawmakers, Green and the university will continue to search for paths to complete the acquisition, said UI spokeswoman Walker.
“We are going to continue to have conversations with the governor and the Legislature and continue to pursue what we consider a great opportunity for our state,” she said.
