DeVry Continues Building Out

DeVry Expanding: Moving HQ to Larger Facilities, Acquiring Post-Secondary Schools in Brazil

Chicago area-based DeVry Inc. (DV - Analyst Report), a provider of post-secondary education in North America, has made 2 announcements that indicate the company is still pursuing an aggressive growth strategy. First, the company plans to relocate and increase the size of it headquarters operations. The relocation will be from Oakbrook Terrace, IL to 2 nearby locations in Downers Grove and Oak Brook.

The move is scheduled for late 2009 or early 2010. The new Highland Landmark V building in Downers Grove (approximately 3 miles west of DeVry's current location) will house the management and staff of DeVry Inc., Becker Professional Review, Chamberlain College of Nursing and DeVry University. The newly remodeled 814 Commerce Drive building located in Oak Brook will house critical support functions, such as student finance and some information technology personnel.

DeVry will realize lower per-square-foot rental rates, but reported operating costs will increase by $2.4 million per year because of the additional square footage leased, and the straight-line accounting methodology for long-term leases. Capital expenditures related to the project are estimated to be between at $10 million and $12 million for construction and office furnishings.

In addition, DeVry has signed an agreement to acquire Fanor, a leading provider of private post-secondary education in northeastern Brazil. Initially, DeVry will purchase 69.3% of Fanor, including real estate, for approximately $23.5 million in cash plus the assumption of debt.

Fanor was founded in 2001 and is based in Fortaleza, Ceará, Brazil. The company is the parent organization of Faculdades Nordeste, Faculdade Ruy Barbosa, and Faculdade FTE ÁREA1. These 3 institutions operate 5 campus locations in the cities of Salvador and Fortaleza, and serve more than 10,000 students through 28 undergraduate programs focused in business management, law, and engineering.

The existing Fanor management team and employees will remain in place. Fanor is a significant step in the company's strategic plan to expand in international markets. DeVry sees Brazil as one of the more attractive higher education markets as the underlying demand dynamics should drive strong long-term growth.

Brazil already possesses one of the highest proportions of market-funded universities both in Latin America and the world. The acquisition of Fanor, which is subject to customary closing conditions, is expected to be accretive to DeVry's earnings beginning in fiscal 2010.