Edison buyout draws Ire in Florida.
Edison Schools and Liberty Partners, the investment firm that manages FRS, cooked up the buyout without consulting Florida teachers. Mark Pudlow, spokesman for the Florida Education Association, questions the wisdom of spending $180 million on a company with "a terrible track record." Edison did not turn a profit until June 2003, when it reported a $10 million quarterly profit.
The flip side is that the outlook for school privatization is excellent, and the purchase of the company will make money for the pension fund. FRS administrators plan to sell the company for a profit in the future. The time for re-selling Edison depends on profitability and the market for education management solutions. The plan could succeed. When Edison was on the market, more than 10 buyers wanted to purchase the company. Adam Tucker, spokesperson for Edison Schools, points out, "It's in everybody's best interest for Edison to be successful."
If Edison succeeds, the biggest beneficiary may be company founder and CEO, Christopher Whittle, not Florida teachers. That's because Whittle remains CEO and could earn tap to $28.6 million over five years in options and pay--on top of a six-figure salary. Whittle receives bonus pay and options if Edison performs "extremely well"--which has not been explained in detail yet--in academic progress and financial performance.
Whether or not teachers make out financially on the deal, Pudlow says it sends a poor message to teachers. While Florida is cutting programs such as summer schools and teacher aides, the state is taking $180 million of the teachers' money to buy a company that peddles solutions that threaten public schools. "To spend $180 million on Edison Schools is a slap in the face," Pudlow says.
Edison's Christopher Whittle
Current position: CEO, Edison Schools
Former position: CEO, Channel One
Potential salary over next five years: $28.6M
Edison's 1999 IPO generated: $122.4M
No. of schools: 149
No. of students: 132,000
No. of states: 20
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|Title Annotation:||Update: education news from schools, businesses, research and government agencies|
|Date:||Feb 1, 2004|
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