February 20, 2015 / 2:00 PM / 5 years ago

Germany's Bertelsmann moves into university business

FRANKFURT (Reuters) - Germany’s Bertelsmann has agreed to take a controlling stake in United States-based Alliant International University in a step to diversify and expand into the business of operating universities.

Europe’s largest media group has made education its top investment priority. It has vowed to achieve 1 billion euros ($1.13 billion) in revenue from a global market that advisory firm GSV has estimated will be worth $5.5 trillion this year and $6.4 trillion by 2017.

Of that market about $1.3 billion will be in the hands of private companies, while the rest will be controlled by governments, according to GSV.

The market for health and human sciences universities in North and Latin America is at about $115 billion Bertelsmann estimates, while the highly fragmented market offers operating margins of up to 30 percent.

Bertelsmann said it expected to seal similar deals in the future. “Over the next few years, we will build a network of universities that deliver innovative education programs in various fields of the health and human sciences,” Bertelsmann’s Chief Executive Thomas Rabe said.

He did not disclose the size of the investment, but a source familiar with the transaction said it was in the mid-double-digit range.

Last year Bertelsmann, which controls broadcaster RTL and co-owns book publisher Penguin Random House, bought e-learning business Relias Learning for $540 million.

In the education market, the German media conglomerate faces competition from global players such as Pearson and McGraw Hill.

($1 = 0.8828 euros)

Reporting by Harro ten Wolde and Joern Poltz; Editing by Liisa Tuhkanen and Jane Merriman

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