INVESTOR RELATIONS
Apollo Group announced on Tuesday, October 30, 2007 that it has completed its acquisition of Aptimus, Inc., an online advertising network. For more information on this new acquisition, please read our Frequently Asked Questions below: BACKGROUND
Q. What is Aptimus, Inc.?
A. Aptimus is the Point-of-Action™ online advertising network that delivers results-driven advertising solutions and management technology to advertisers, Web publishers, and ad agencies across all digital media channels. Through its advanced technology, Aptimus creates richer, more relevant experiences for consumers through higher levels of interaction, engagement, creativity and permission.
Q. What is Apollo Group?
A. Apollo Group, Inc. has been an education provider for more than 30 years, operating the University of Phoenix, the Institute for Professional Development, the College for Financial Planning, Western International University and Insight Schools. The Company offers innovative and distinctive educational programs and services at high school, college and graduate levels at 259 locations in 40 states and the District of Columbia; Puerto Rico; Alberta and British Columbia, Canada; Mexico and the Netherlands; as well as online throughout the world.
Q. Why did Apollo Group acquire Aptimus?
A. Apollo Group bought Aptimus as a strategic investment in furtherance of Apollo's broader efforts to position the Company to best monitor, manage and control its marketing investments and brands. Apollo is Aptimus' largest client and user of its technology, network and marketing communication capabilities. Through this purchase, Apollo is well positioned in the ownership of its student acquisition assets and obtains state of the art technology for data handling, ad serving and optimization. Apollo's lead generation activities will transition to the new entity after the first of the year. Aptimus benefits from having a strong strategic partner to help it grow through increased investment and additional business.
Q. What does the acquisition mean for Aptimus?
A. Aptimus will continue to operate as a separate business that is wholly owned by Apollo
Q. What will happen to the Aptimus brand?
A. Aptimus will maintain its current brand identity.
BUSINESS/PRODUCTS/TECHNOLOGY
Q. How will this acquisition benefit Aptimus publishers, advertisers, and ad agencies?
A. Apollo Group will continue to support Aptimus' existing products but the acquisition will provide Aptimus with greater financial and human resources to continue offering advanced Internet advertising and optimization technology to its current Internet publishers and a broad base of advertising clients in other industries. Those include technology, entertainment, consumer product goods and finance. Advertisers and publishers will continue to leverage Aptimus' Point-of-Action™ Network to achieve their marketing goals and Aptimus' commitment to innovation and results for both clients and partners will drive the development of more advanced versions of their current services.
Q. Will Aptimus be able to serve non-University of Phoenix ads to network sites?
A. Yes.
Q. What are Apollo's plans for Aptimus' products?
A. Apollo will leverage Aptimus' existing model to increase recruitment and student inquiries by delivering more relevant and more targeted ads to potential students. In addition, Apollo will provide the financial resources for continued support of existing products as well as for developing and innovating new products.
CUSTOMER AND PARTNER SUPPORT
Q. How will this acquisition benefit end users?
A. Aptimus is committed to providing richer, more relevant brand experiences to end users and potential students through higher levels of consumer interaction, engagement and consent. Apollo believes this level of marketing engagement will provide greater levels of satisfaction to clients and end users.
Q. How will I know if there is a change to my sales account team?
A. Apollo plans to offer continued employment to substantially all client representatives. Therefore, in most cases clients will continue to work with the same day-to-day contacts. Clients will be notified if there are any changes to their account teams.
TRANSACTION AND FINANCIAL DETAILS
Q. What are the terms of the agreement?
A. Apollo Group acquired Aptimus in an all-cash transaction for approximately $48 million*. Aptimus will become a wholly-owned subsidiary of Apollo Group.
* Aptimus shareholders will receive $6.25 cash in exchange for each share of Aptimus stock they hold.
Q. What do I need to do to exchange my Aptimus stock certificates for Apollo Group stock?
A. After the closing, each shareholder will be contacted by a bank or trust company acting as paying agent. The paying agent will explain the procedures for submitting stock for cancellation in exchange for the appropriate per share cash price.
Q. What will Aptimus option holders receive in the merger?
A. Subject to certain exceptions, each Aptimus stock option that is outstanding and unexercised immediately prior to the closing will be converted into an option to purchase Apollo Group common stock. Apollo Group will assume that stock option (or will replace that stock option by issuing a materially equivalent replacement stock option to purchase Apollo Group common stock) in accordance with the terms of the applicable Aptimus stock option plan and terms of the stock option agreement relating to that Aptimus stock option.
Q. What is the financial impact of the acquisition to Apollo? Is the deal dilutive to earnings?
A. The financial impact of the acquisition is minimal. There will be a certain amount of goodwill which will be determined once an independent fair value assessment is performed of Aptimus. Given the relatively small size of Aptimus relative to Apollo, we do not expect any material dilution to Apollo's earnings.
Q. What should we expect in terms of margin improvement once Aptimus is integrated?
A. Our near-term goal (for the next 6 months) is to maintain current lead volume and quality through branded and non-branded search and display advertising as well as via existing third party providers. We are phasing out our current agency relationship with Advertising.com, and expect to have a very smooth transition to Aptimus. Over time, we hope to see improvements and greater efficiencies in our student acquisition costs by eliminating certain affiliates and mark ups and delivering more relevant and more targeted ads to potential students
INDUSTRY/BUSINESS/STRATEGY
Q. How does this acquisition broaden Apollo Group's market opportunity? What is the revenue opportunity?
A. This acquisition represents a great opportunity for Apollo to further optimize its lead generation marketing communications capabilities and over time reduce its student acquisition costs. Currently, approximately 50% of Aptimus' revenue is outside the education sector and there is potential to grow non-education activities, which would potentially increase revenues. However, this is not the current priority as the primary goal of the acquisition is to lower new student acquisition costs, improve the student experience, and provide Apollo greater control over our brands.
Q. Why buy Aptimus versus partnering or doing it on your own?
A. Purchasing Aptimus provides Apollo Group with a strong management and staff team, proprietary technology and scale. Developing this in-house would have taken significant time and resources. Owning Aptimus and its technology gives Apollo control over its online brands and the flexibility to invest in digital media innovation. Communicating effectively with prospective students and other constituencies online is a key to our business and being on the leading edge of digital media and internet marketing communications is therefore very important to us.
For more information, please visit Apollo Group, Inc. at http://www.apollogrp.edu/.