8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report: October 30, 2017

Capella Education Company

(Exact name of Registrant as specified in its charter)

Minnesota	001-33140	41-1717955
(State or other jurisdiction of incorporation)	(Commission     File Number)	(IRS Employer Identification No.)

225 South 6^th Street, 9^th Floor, Minneapolis, Minnesota 55402

(Address of principal executive offices, including zip code)

(888) 227-3352

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☒ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company    ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Item 8.01. Other Matters

On October 30, 2017, Strayer Education, Inc., a Maryland corporation (“Strayer”), and Capella Education Company, a Minnesota corporation (“Capella”), issued a joint press release announcing the execution of an Agreement and Plan of Merger (the “Merger Agreement”) entered into among Strayer, Capella and Sarg Sub Inc. A copy of the press release is attached as Exhibit 99.1 hereto. In addition, Strayer and Capella provided supplemental information regarding the proposed transaction in connection with presentations to analysts and investors. A copy of the slides made available in connection with the presentations is attached as Exhibit 99.2 hereto.

Forward Looking Statements

This communication, in addition to historical information, contains “forward-looking statements” (as defined in the Private Securities Litigation Reform Act of 1995) regarding, among other things, future events or the future financial performance of Strayer Education Inc., a Maryland corporation (“Strayer”) and Capella Education Company, a Minnesota corporation (“Capella”). Words such as “anticipate,” “expect,” “project,” “intend,” “believe,” and words and terms of similar substance used in connection with any discussion of future plans, actions or events identify forward-looking statements. Forward-looking statements relating to the proposed transaction include, but are not limited to: statements about the benefits of the proposed transaction between Strayer and Capella, including future financial and operating results; Strayer’s and Capella’s plans, objectives, expectations and intentions; the expected timing of completion of the proposed transaction; and other statements relating to the acquisition that are not historical facts. Forward-looking statements are based on information currently available to Strayer and Capella and involve estimates, expectations and projections. Investors are cautioned that all such forward-looking statements are subject to risks and uncertainties, and important factors could cause actual events or results to differ materially from those indicated by such forward-looking statements. With respect to the proposed transaction between Strayer and Capella, these factors could include, but are not limited to: the risk that Strayer or Capella may be unable to obtain governmental and regulatory approvals required for the transaction, or that required governmental and regulatory approvals may delay the transaction or result in the imposition of conditions that could reduce the anticipated benefits from the proposed transaction or cause the parties to abandon the proposed transaction; the risk that a condition to closing of the transaction may not be satisfied; the length of time necessary to consummate the proposed transaction, which may be longer than anticipated for various reasons; the risk that the businesses will not be integrated successfully; the risk that the cost savings, synergies and growth from the proposed transaction may not be fully realized or may take longer to realize than expected; the diversion of management time on transaction-related issues; the effect of future regulatory or legislative actions on the companies or the industries in which they operate; the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; economic and foreign exchange rate volatility; the continued strength of the post-secondary and proprietary education markets; unexpected changes relating to competitive factors in the post-secondary and proprietary education industries; the timing, success and market reception for Strayer and Capella’s new and existing educational services and related products; the possibility of new technologies outdating Strayer’s or Capella’s services or products; the outcomes of any litigation; continued support of Strayer’s or Capella’s services or products by influential educational professionals; changes in the general economic environment, or social or political conditions, that could affect the businesses; the potential impact of the announcement or consummation of the proposed transaction on relationships with learners, suppliers, competitors, management and other employees; the ability to attract new learners and retain existing learners in the manner anticipated; the ability to hire and retain key personnel; reliance on and integration of information technology systems; the risks associated with assumptions the parties make in connection with the parties’ critical accounting estimates and legal proceedings; and the potential of international unrest, economic downturn or effects of currencies, tax assessments, tax adjustments, anticipated tax rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs.

Additional information concerning other risk factors is also contained in Strayer’s and Capella’s most recently filed Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other SEC filings.

Many of these risks, uncertainties and assumptions are beyond Strayer’s or Capella’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the information currently available to the parties on the date they are made, and neither Strayer nor Capella undertakes any obligation to update publicly or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this

communication. Nothing in this communication is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per Strayer share or Capella share for the current or any future financial years or those of the combined company, will necessarily match or exceed the historical published earnings per Strayer share or Capella share, as applicable. Neither Strayer nor Capella gives any assurance (1) that either Strayer or Capella will achieve its expectations, or (2) concerning any result or the timing thereof, in each case, with respect to any regulatory action, administrative proceedings, government investigations, litigation, warning letters, consent decree, cost reductions, business strategies, earnings or revenue trends or future financial results. All subsequent written and oral forward-looking statements concerning Strayer, Capella, the proposed transaction, the combined company or other matters and attributable to Strayer or Capella or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above.

Additional Information And Where To Find It

This communication is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the proposed transaction between Strayer and Capella or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. The proposed business combination transaction between Strayer and Capella will be submitted to the respective stockholders of Strayer and Capella for their consideration. Strayer will file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 that will include a joint proxy statement of Strayer and Capella that also constitutes a prospectus of Strayer. Strayer and Capella will deliver the joint proxy statement/prospectus to their respective stockholders as required by applicable law. Strayer and Capella also plan to file other documents with the SEC regarding the proposed transaction. This communication is not a substitute for any prospectus, proxy statement or any other document which Strayer or Capella may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF STRAYER AND CAPELLA ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT STRAYER, CAPELLA, THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and stockholders will be able to obtain free copies of the joint proxy statement/prospectus and other documents containing important information about Strayer and Capella, once such documents are filed with the SEC, through the website maintained by the SEC at www.sec.gov. Strayer and Capella make available free of charge at www.capellaeducationcompany.com and www.strayereducation.com, respectively (in the “Investor Relations” section), copies of materials they file with, or furnish to, the SEC.

Participants In The Merger Solicitation

Strayer, Capella, and certain of their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the stockholders of Strayer and Capella in connection with the proposed transaction. Information about the directors and executive officers of Capella is set forth in its proxy statement for its 2017 annual meeting of stockholders, which was filed with the SEC on March 23, 2017. Information about the directors and executive officers of Strayer is set forth in its proxy statement for its 2017 annual meeting of stockholders, which was filed with the SEC on March 16, 2017. These documents can be obtained free of charge from the sources indicated above. Other information regarding those persons who are, under the rules of the SEC, participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.

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Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit Number	Description of Exhibit
99.1	Joint Press Release issued by Capella and Strayer, dated October 30, 2017
99.2	Investor Presentation Slides, dated October 30, 2017

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CAPELLA EDUCATION COMPANY
	By:	/s/ Renee L. Jackson
Date: October 30, 2017		Renee L. Jackson
		Senior Vice President and General Counsel

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EX-99.1

Exhibit 99.1

STRAYER EDUCATION, INC. AND CAPELLA EDUCATION COMPANY COMBINE TO CREATE A NATIONAL LEADER IN EDUCATION INNOVATION

Merger of Equals Brings Together Two Best-in-Class Academic Institutions

Strayer University and Capella University to Continue Operations as Independent,

Accredited Institutions of Higher Education; Faculty and Academic Support Service Positions at Both

Universities to Be Maintained

Combination Will Create More Affordable Options for Students; Facilitate Sharing of Best Practices; and

Increase Resources for Successful Academic and Employment Outcomes at Each University

HERNDON, VA, and MINNEAPOLIS, MN – October 30, 2017 – Strayer Education, Inc. (“Strayer”) (NASDAQ: STRA) and Capella Education Company (“Capella”) (NASDAQ: CPLA) today announced that they have agreed to combine in an all-stock merger of equals transaction, creating a national leader in education innovation. Strayer will be the remaining corporate entity under which both universities will operate.

Strayer University and Capella University will continue to operate as independent and separately accredited institutions, together serving approximately 80,000 students across all 50 states. Both universities will maintain their separate Boards, be led by their current Presidents and maintain faculty and academic support service positions separately at each respective institution. The combination is expected to achieve corporate level efficiencies that will enable each university to accelerate innovations that improve affordability, and enhance academic and career outcomes for students.

Robert S. Silberman, Executive Chairman of Strayer, said, “We have been admirers of Capella’s innovation and expertise in online education for years. We are delighted to have the opportunity to combine Capella’s capabilities with Strayer’s 125-year heritage of educating working adults. This transaction will enhance our collective ability to deliver better academic outcomes, to more working adults, at more affordable prices.”

Kevin Gilligan, Chairman and Chief Executive Officer of Capella, who will become Vice Chairman of Strayer, stated, “Strayer and Capella complement each other in powerful ways and share cultures that value integrity and innovation. Uniting Strayer University’s degrees in business, including the Jack Welch Management Institute, accounting, economics, and information technology with Capella University’s competency-based flexible degree programs, healthcare offerings, and robust doctoral portfolio will help us better meet the educational needs of students in the modern economy. We are committed to maintaining our standards of excellence across both universities and our non-degreed businesses.”

Karl McDonnell, Chief Executive Officer of Strayer, said, “This combination will allow us to accelerate investment in the educational experience we deliver to students at both universities, while achieving back office efficiencies captured through the merger of our corporate functions. Strayer, founded in 1892, and Capella, founded in 1993, have long been recognized for innovation, distinguished faculties, sought after accreditation and student satisfaction and success.”

Combination Delivers Significant Benefits

Increased Scale:

• The ability to leverage best-in-class processes, support and resources of each respective university will benefit student success and employment outcomes.

• Lower combined corporate expenses position each university to extend the affordability of their offerings and further invest in a world-class student experience and academic outcomes.

• The universities will be able to share best practices to improve academic outcomes and improve service, increasing the attractiveness of each university to students and employers.

Greater Capabilities:

• While the universities will remain independent, students and faculty at both institutions will benefit from Capella University’s competency-based learning infrastructure, assessment capabilities and track-record of improving student success as well as Strayer University’s video and simulation classroom and content capabilities and close relationships with employers.

• Both institutions will work towards allowing students to seamlessly transfer credits between the universities and expect to honor employer discounts from either institution.

• Strayer University’s extensive ground-based footprint creates the opportunity for Capella University to extend its competency-based model into hybrid learning.

Stronger Financial Platform:

• The broader, more diversified product offering of the combined company will provide for a more balanced revenue mix.

• With a strong, debt free balance sheet, and enhanced cash flow, the combined company will be well-positioned to accelerate innovation in key products and services and return capital to shareholders through an expected annual dividend of $2.00 per share following the close of the transaction.

• The merger of the corporate organizations is expected to achieve annual cost savings of approximately $50 million to be fully phased in within 18 months of closing. Of this amount, we expect approximately half will be realized during the 12 months following closing. These cost savings are expected to be achieved through the consolidation of executive and corporate functions, certain marketing capabilities and IT operations.

• The merger is expected to be accretive to Strayer’s EPS by approximately 20% to 25% by 2019.

Transaction Details

Pursuant to the terms of the merger agreement, Strayer and Capella will combine in an all-stock merger of equals with Capella shareholders receiving 0.875 Strayer shares for each Capella share, which represents a premium of approximately 22% to the closing price of Capella shares on Friday, October 27, 2017, the last trading day prior to announcement. Based on the closing prices of Strayer and Capella common stock on October 27, 2017, the implied equity value of the combined company is approximately $1.9 billion.

Upon completion of the merger, which is expected to be tax-free to shareholders of both companies, Strayer shareholders will own approximately 52% and Capella shareholders will own approximately 48% of the combined company on a fully diluted basis.

The combined company’s corporate headquarters will be located in Herndon, Virginia, and the company will maintain a significant presence in Minneapolis, Minnesota, including the headquarters of Capella University and the combined entity’s IT resources.

The transaction has been unanimously approved by the Boards of Directors of both companies.

Management and Governance

Upon closing of the transaction, Robert S. Silberman will be Executive Chairman, Kevin Gilligan will be Vice Chairman, and Karl McDonnell will be Chief Executive Officer of the combined entity. Also upon closing, Strayer Education, Inc. will be renamed Strategic Education, Inc. Its ticker symbol will remain STRA. Strayer’s Board will be increased to 12 directors total – with three to be nominated by Capella.

Approvals and Time to Close

The transaction is expected to close in the 3rd quarter of 2018, subject to customary closing conditions, including antitrust approvals, approvals by the Department of Education, state regulators and relevant accreditation bodies as well as approval by both Strayer and Capella shareholders.

Advisors

Perella Weinberg Partners LP is serving as Strayer’s financial advisor for the transaction, with Kirkland & Ellis LLP serving as its legal advisor.

Morgan Stanley & Co. LLC is serving as Capella’s financial advisor for the transaction, with Latham & Watkins LLP serving as its legal advisor.

Conference Call and Webcast Details

The companies will hold a joint conference call to discuss this announcement (as well as their 3^rd Quarter financial results) on Monday, October 30, 2017, at 8:00 a.m. eastern time (ET). To participate in the live call, investors should dial (866) 547-1509 (domestic) or (920) 663-6208 (international) at 7:50 a.m. (ET), conference ID# 6889128. The webcast, including the accompanying presentation, will be available on both the Strayer Education Inc. website (www.strayereducation.com) and the Capella Education Company website (www.capellaeducation.com) in the investor relations section. A replay of the call will be available from October 30, 2017, through November 27, 2017, at (800) 585-8367 (domestic) or (404) 537-3406 (international), conference ID# 6889128.

Please note that the above call is in lieu of the previously scheduled Q3 2017 earnings conference calls for each company.

About Strayer Education, Inc.

Strayer Education, Inc. (NASDAQ: STRA) is educating a more competitive and qualified workforce by solving higher education’s most challenging problems. It includes Strayer University, a regionally accredited institution that delivers affordable degree programs for working adults, and a Top 25 Princeton Review-ranked executive MBA program through the Jack Welch Management Institute. Non-degree web and mobile application development courses are offered through the New York Code + Design Academy. Strayer also transforms the workforces of its corporate partners through customized degree and professional development programs. By deploying innovative teaching methods and technologies that enhance student learning outcomes, Strayer makes it possible for working adults to acquire the skills they need to succeed in today’s rapidly changing economy.

About Capella Education Company

Capella Education Company (NASDAQ: CPLA) is an educational services company that provides access to high-quality education through online postsecondary degree programs and job-ready skills offerings needed in today’s market. Capella’s portfolio of companies is dedicated to closing the skills gap by providing the most direct path between learning and employment.

Forward Looking Statements

This communication contains certain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “will,” “forecast,” “outlook,” “plan,” “project,” or similar words and may include statements with respect to, among other things, the proposed merger of a wholly-owned subsidiary of Strayer with and into Capella, including the expected timing of completion of the merger; the anticipated benefits of the merger, including estimated synergies; the combined company’s plans, objectives and expectations; future financial and operating results; and other statements that are not historical facts. The statements are based on Strayer’s and Capella’s current expectations and are subject to a number of assumptions, uncertainties and risks. In connection with the safe-harbor provisions of the Reform Act, Strayer and Capella have identified important factors that could cause Strayer’s or Capella’s actual results to differ materially from those expressed in or implied by such statements. The assumptions, uncertainties and risks include:

• the risk that the merger may not be completed in a timely manner or at all due to the failure to obtain the approval of Strayer’s or Capella’s stockholders or the failure to satisfy other conditions (including obtaining required regulatory and educational agency approvals) to completion of the merger;

• the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement;

• the outcome of any legal proceeding that may be instituted against Strayer, Capella and others following the announcement of the merger;

• the amount of the costs, fees, expenses and charges related to the merger;

• the risk that the benefits of the merger, including expected synergies, may not be fully realized or may take longer to realize than expected;

• the risk that the merger may not advance the combined company’s business strategy and growth strategy;

• the risk that the combined company may experience difficulty integrating Strayer’s and Capella’s employees or operations;

• the potential diversion of Strayer’s and Capella’s management’s attention resulting from the proposed merger; and

• other risks and uncertainties identified in Strayer’s and Capella’s filings with the Securities and Exchange Commission.

Actual results may differ materially from those projected in the forward-looking statements. Strayer and Capella undertake no obligation to update or revise forward-looking statements.

Additional Information and Where to Find It

Investors and security holders are urged to carefully review and consider each of Strayer’s and Capella’s public filings with the Securities and Exchange Commission (the “SEC”), including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q. The documents filed by Strayer with the SEC may be obtained free of charge at Strayer’s website at www.strayereducation.com, in the “Investor Relations” tab at the top of the page, or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Strayer by requesting them in writing to 2303 Dulles Station Boulevard, Herndon, VA 20171. The documents filed by Capella with the SEC may be obtained free of charge at Capella’s website at www.capellaeducation.com, in the “Investor Relations” tab at the top of the page, or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Capella by requesting them in writing to 225 South 6th Street, 9th Floor, Minneapolis, Minnesota 55402.

In connection with the proposed transaction, Strayer intends to file a registration statement on Form S-4 with the SEC which will include a joint proxy statement of Strayer and Capella and a prospectus of Strayer,

and each party will file other documents regarding the proposed transaction with the SEC. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS OF STRAYER AND CAPELLA ARE URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS, WHEN THEY BECOME AVAILABLE, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. A definitive joint proxy statement/prospectus will be sent to the stockholders of each party seeking the required shareholder approval. Investors and security holders will be able to obtain the registration statement and the joint proxy statement/prospectus free of charge from the SEC’s website or from Strayer or Capella as described above. The contents of the websites referenced above are not deemed to be incorporated by reference into the registration statement or the joint proxy statement/prospectus.

Certain Information Regarding Participants

Strayer, Capella and their respective directors and executive officers may be deemed participants in the solicitation of proxies in connection with the proposed transaction. You can find information about Strayer’s directors and executive officers in its definitive proxy statement for the 2017 Annual Meeting of Stockholders, which was filed with the SEC on March 16, 2017, and in other documents filed with the SEC by Strayer and its directors and executive officers. You can find information about Capella’s directors and executive officers in its definitive proxy statement for the 2017 Annual Meeting of Stockholders, which was filed with the SEC on March 23, 2017, and in other documents filed with the SEC by Capella and its directors and executive officers. Additional information regarding the interests of these directors and executive officers in the proposed transaction will be included in the registration statement, joint proxy statement/prospectus or other documents filed with the SEC, if any, when they become available. You may obtain these documents (when they become available) free of charge at the SEC’s web site at www.sec.gov and from Strayer or Capella as described above.

No Offer or Solicitations

This document shall not constitute an offer to sell or buy or the solicitation of an offer to buy or sell any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933.

CONTACTS

Strayer Education, Inc.

Investors

Daniel Jackson, Executive Vice President and Chief Financial Officer

703-713-1862

daniel.jackson@strayer.edu

Media

Sard Verbinnen & Co

David Reno / Andy Duberstein / Bryan Locke

212-687-8080 / 312-895-4700

Capella Education Company

Investors

Steven Polacek, Senior Vice President and Chief Financial Officer

612-977-5810

Steve.Polacek@capella.edu

Media

Mike Buttry, Vice President for Public Affairs and Communications

612-977-5499

Mike.Buttry@capella.edu

EX-99.2

Exhibit 99.2

Creating a National Leader in Education Innovation
October 30, 2017

Forward Looking Statements
This communication contains certain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “will,” “forecast,” “outlook,” “plan,” “project,” or similar words and may include statements with respect to, among other things, the proposed merger of a wholly-owned subsidiary of Strayer with and into Capella, including the expected timing of completion of the merger; the anticipated benefits of the merger, including estimated synergies; the combined company’s plans, objectives and expectations; future financial and operating results; and other statements that are not historical facts. The statements are based on Strayer’s and Capella’s current expectations and are subject to a number of assumptions, uncertainties and risks. In connection with the safe-harbor provisions of the Reform Act, Strayer and Capella have identified important factors that could cause Strayer’s or Capella’s actual results to differ materially from those expressed in or implied by such statements. The assumptions, uncertainties and risks include:
the risk that the merger may not be completed in a timely manner or at all due to the failure to obtain the approval of Strayer’s or Capella’s stockholders or the failure to satisfy other conditions (including obtaining required regulatory and educational agency approvals) to completion of the merger;
the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement;
the outcome of any legal proceeding that may be instituted against Strayer, Capella and others following the announcement of the merger; the amount of the costs, fees, expenses and charges related to the merger; the risk that the benefits of the merger, including expected synergies, may not be fully realized or may take longer to realize than expected;
the risk that the merger may not advance the combined company’s business strategy and growth strategy;
the risk that the combined company may experience difficulty integrating Strayer’s and Capella’s employees or operations; the potential diversion of Strayer’s and Capella’s management’s attention resulting from the proposed merger; and other risks and uncertainties identified in Strayer’s and Capella’s filings with the Securities and Exchange Commission.
Actual results may differ materially from those projected in the forward-looking statements. Strayer and Capella undertake no obligation to update or revise forward-looking statements. 2

Additional Information and Where to Find It
Investors and security holders are urged to carefully review and consider each of Strayer’s and Capella’s public filings with the Securities and Exchange Commission (the “SEC”), including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q.
In connection with the proposed transaction, Strayer intends to file a registration statement on Form S-4 with the SEC which will include a joint proxy statement of Strayer and Capella and a prospectus of Strayer, and each party will file other documents regarding the proposed transaction with the SEC. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS OF Strayer AND Capella ARE URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS, WHEN THEY BECOME AVAILABLE, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. A definitive joint proxy statement/prospectus will be sent to the stockholders of each party seeking the required shareholder approval. Investors and security holders will be able to obtain the registration statement and the joint proxy statement/prospectus free of charge from the SEC’s website or from Strayer or Capella as described below. The contents of the websites referenced are not deemed to be incorporated by reference into the registration statement or the joint proxy statement/prospectus.
STRAYER EDUCATION, INC.
2303 Dulles Station Blvd. Herndon, VA 20171 Attention: Investor Relations 708.247.2507 investor.relations@strayereducation.com
CAPELLA EDUCATION COMPANY
Capella Tower
225 South Sixth Street, 9th Floor Minneapolis, MN 55402 Attention: Heide Erickson 612.977.5172 investor.relations@capella.edu
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Certain Information Regarding Participants
Strayer, Capella and their respective directors and executive officers may be deemed participants in the solicitation of proxies in connection with the proposed transaction. You can find information about Strayer’s directors and executive officers in its definitive proxy statement for the 2017 Annual Meeting of Stockholders, which was filed with the SEC on March 16, 2017, and in other documents filed with the SEC by Strayer and its directors and executive officers. You can find information about Capella’s directors and executive officers in its definitive proxy statement for the 2017 Annual Meeting of Stockholders, which was filed with the SEC on March 23, 2017, and in other documents filed with the SEC by Capella and its directors and executive officers. Additional information regarding the interests of these directors and executive officers in the proposed transaction will be included in the registration statement, joint proxy statement/prospectus or other documents filed with the SEC, if any, when they become available. You may obtain these documents (when they become available) free of charge at the SEC’s web site at www.sec.gov and from Strayer or Capella as described above.
No Offer or Solicitations
This document shall not constitute an offer to sell or buy or the solicitation of an offer to buy or sell any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933. 4

Today’s Participants
ROBERT SILBERMAN
Executive Chairman
KARL MCDONNELL
Chief Executive Officer
DANIEL JACKSON
Chief Financial Officer
KEVIN GILLIGAN
Chairman and Chief Executive Officer
STEVEN POLACEK
Chief Financial Officer
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Creating a National Leader in Education Innovation
All-stock merger of equals with Capella shareholders receiving 0.875 Strayer shares for each Capella share; Strayer shareholders will own approximately 52% and Capella shareholders will own approximately 48% of the combined company on a fully diluted basis
Combination expected to close in the third quarter of 2018, subject to customary regulatory approvals and closing conditions, including approvals by the Department of Education, state regulators and relevant accreditation bodies, and shareholders of both companies
Strayer University and Capella University will operate as independent, accredited institutions offering nearly 135 programs to approximately 80,000 students across all 50 states
Both universities will maintain separate boards and be led by their current presidents
Strayer and Capella are highly complementary in powerful ways and share cultures that value integrity and innovation as well as a mission to make learning work for adults in the modern economy
Highly achievable corporate-level efficiencies will enable each university to expand innovation to improve affordability and enhance learning and career outcomes while creating greater value for shareholders
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Stronger Corporate Platform Supporting Independent Universities
STRAYER FAMILY
Leadership
President: Brian W. Jones
Existing Board of Trustees
Accredited by
Middle States Commission on Higher Education
Accelerates innovations that improve affordability and enhance the learning experience and career outcomes for students
CAPELLA FAMILY
Leadership
President: Richard Senese, PhD, LP
Existing Board of Directors
Accredited by
Higher Learning Commission
STRATEGIC EDUCATION, INC.
Leadership
Robert Silberman Kevin Gilligan Karl McDonnell Steven Polacek
Executive Chairman Vice Chairman CEO Integration Head
Corporate Functions
Finance, Accounting, Human Resources, Legal, IT, Marketing
Headquarters
Herndon, Virginia, with significant presence in Minneapolis
Scale(1) $895 million Revenue $182 million EBITDA
Financial Profile(1)
Debt Free $80 million Free Cash Flow
(1) Pro forma ended September 30, 2017; EBITDA net of stock based compensation and excludes approximately $50 million in expected annual run rate cost synergies
7

Transaction Overview
Transaction Structure
All-stock, tax-free merger of equals
Capella shareholders to receive 0.875 Strayer shares for each Capella share
Pro forma ownership: 52% Strayer shareholders and 48% Capella shareholders
Leadership
Robert Silberman will be Executive Chairman
Kevin Gilligan will be Vice Chairman
Karl McDonnell will be CEO
12 person board; 9 Strayer nominated directors and 3 Capella nominated directors
Organization
Universities to operate as distinct, independent institutions
Combined company will be named Strategic Education, Inc.
Corporate headquarters in Herndon, Virginia
Significant presence in Minneapolis, Minnesota, including Capella University headquarters and combined IT resources
Financial Benefits
Expected to be accretive to Strayer’s EPS by approximately 20% to 25% by 2019, based on annual cost savings of approximately $50 million. Run rate synergies expected to be fully phased in within 18 months of closing, with half realized during the first 12 months following closing
Strong balance sheet and combined cash flows support expected annual dividend of $2 per share
Closing Conditions
Closing expected in the third quarter of 2018
Subject to approval by Department of Education, state regulators, relevant accreditation bodies, shareholders of both companies among other customary regulatory approvals and closing conditions
8

Capella Education Overview
A leading educational services company providing online postsecondary degree programs and job-ready skills offerings to working adults:
Founded in 1993 with diversified program offerings:
Capella University
1,900+ online courses
54 degree programs
Accredited by Higher Learning Commission
Capella Learnings Solutions
Partnership with CareerBuilder to link learning experiences directly with job demand
DevMountain
Dedicated coding programs
Hackbright Academy
Software engineering programs exclusively for women
Sophia
Self-paced courses for college credit
(1) EBITDA net of stock based compensation
~37,000 STUDENTS
( A s o f 9 / 3 0 / 1 7 )
7% 11% 19% 38% 25%
Social & Behavioral Sciences
Education
Business & Technology
Public Service Leadership
Nursing and Health Sciences
KEY FINANCIALS TTM ENDED SEPT 30 2017
Revenue $440 million
EBITDA(1) $92 million
Free Cash Flow $41 million
9

Enhanced Scale, Diversity & Educational Experience
~80,000
Students
~135
Degree and Certificate Programs
$895M $182M
Revenue EBITDA
Note: Pro Forma TTM ended September 30, 2017; EBITDA net of stock based compensation and excludes approximately $50 million in expected annual run rate cost synergies
PRO FORMA DEGREE MIX
7% 11% 36% 46%
Master’s Bachelor’s PhD/Doctoral Certificate/Associate
MEANINGFUL BENEFITS FOR STUDENTS
Complementary program offerings with more choices for students
Sharing of academic best practices to enhance the student experience
Expanded innovation to improve affordability
Transferability of credits
Enhanced student services to promote educational and career outcomes
10

A Compelling Platform for Students
11

Comprehensive Degree Programs
KEY P ROGRAM OFFERIN GS Bachelors Associates
Bachelor of Science in Accounting Bachelor of Business Administration Bachelor of Science in Criminal Justice Bachelor of Science in Information Systems Bachelor of Science in Information Technology Bachelor of Science in Nursing
Associate in Arts in Accounting
Associate in Arts in Acquisition & Contract Management Associate in Arts in Business Administration Associate in Arts in Information Systems Associate in Arts in Information Technology Associate in Arts in Marketing
Masters
Certificates
Master of Science in Accounting Master of Business Administration Master of Education Master of Science in Information Systems Master of Science in Information Assurance Master of Science in Health Services Administration Master of Public Administration Master of Human Resource Management Jack Welch Executive MBA
Master of Science in Management Master of Science in Nursing Digital Entrepreneurship MBA
Diploma in Acquisition Contract Management JWMI Executive Certificates
KEY P ROGRAM OFFERIN GS
( 1 5 2 S P E C I A L I Z A T I O N S)
Bachelors
Bachelor of Science in Business (FlexPath) Bachelor of Science in Criminal Justice Bachelor of Science in Health Care Administration Bachelor of Science in Information Technology (FlexPath) Bachelor of Science in Psychology (FlexPath) Bachelor of Science in Public Health Bachelor of Science in Nursing (FlexPath)
Certificates
51 certificate programs
Masters Doctorates/Eds
Master of Business Administration (FlexPath)
Master of Education in Teaching and Learnings (FlexPath) Master of Health Administration (FlexPath) Master of Public Health Master of Science Education Innovation and Technology Master of Science in Addiction Studies Master of Science in Analytics Master of Science in Clinical Psychology Master of Science in Criminal Justice Master of Science in Education Master of Science in Emergency Management Master of Science in Higher Education Master of Science in Human Resource Management Master of Science in Human Services Master of Science in Information Assurance and Security Master of Science in Information Systems and Technology Management (FlexPath) Master of Science in Marriage and Family Counseling/Therapy Master of Science in Mental Health Counseling Master of Science in Psychology (FlexPath) Master of Science in School Counseling Master of Science in Studies in Human Behavior Master of Science in Nursing (FlexPath) Master of Social Work Master of Social Work Advanced Standing
Doctor of Business Administration Doctor of Education Doctor of Emergency Management Doctor of Health Administration Doctor of Human Services Doctor of Information Technology Doctor of Nursing Practice
Doctor of Philosophy in Advanced Studies in Human Behavior Doctor of Philosophy in Business Administration Doctor of Philosophy in Counselor Education Supervision Doctor of Philosophy in Criminal Justice Doctor of Philosophy in Education Doctor of Philosophy in Emergency Management Doctor of Philosophy in Human Services Doctor of Philosophy in Information Technology Doctor of Philosophy in Psychology Doctor of Psychology Doctor of Psychology in School Psychology Doctor of Public Administration Doctor of Public Health Doctor of Social Work Education Specialist
12

Strayer Education Overview
A diversified education company with 125-year track record of educating working adults through undergraduate and graduate degree programs:
Strayer University
73 Campuses across 16 states and the District of Columbia
Accredited by Middle States Commission on Higher Education
Jack Welch Management Institute
Top 25 ranked online MBA program by Princeton Review
Strayer@Work
Over 325 corporate relationships
The New York Code + Design Academy
Robust online degree programs
83% of program seats are online
(1) EBITDA net of stock based compensation
~42,000 STUDENTS
( A s o f 9 / 3 0 / 1 7 )
1% 5% 4% 16% 11% 10% 53%
Undergrad—Business Grad—Business JWMI
Undergrad—IT Grad – IT
Undergrad—Other Grad – Other
KEY FINANCIALS TTM ENDED SEPT 30 2017
Revenue $455 million
EBITDA(1) $90 million
Free Cash Flow $39 million
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A Shared Focus on Delivering Value & Driving Outcomes For Students
AFFORDABILITY
Strayer
20% undergraduate tuition reduction in 2014
Graduation Fund program provides up to another 25% tuition reduction to bachelor degree program cost
Capella
With FlexPath program learners can complete their degree in half the time and half the cost
Over $30 million in scholarships available
DATA DRIVEN SUPPORT
Deep data analytics
Leading learning model and assessment capabilities
Leveraging data to support student decisions
SUPERIOR OUTCOMES
Strayer
Over 80% continuation rate
20% increase in investment per student academic services since 2010
Capella
97% of employers surveyed rated the work performance of Capella graduates as proficient or exceptional
2014 cohort default rate of 6.9% below national, public and private not-for-profit institution averages
Increased early cohort persistence rate by 22% over last five years
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Highly Achievable Cost Synergies
Expected annual cost savings of approximately $50 million
Expect to achieve full run rate within first 18 months following closing with approximately half realized during first 12 months following closing Consolidation of executive functions Capturing efficiencies across marketing and IT
Approximately $50 million in one-time, cash and non-cash costs to achieve
Expected to be accretive to Strayer’s EPS by approximately 20% to 25% by 2019
Reinvestment to strengthen academic offerings, innovation and affordability
Opportunity to grow faster together than either company could achieve on its own
15

Strong Cash Flow to Support Investment and Return of Capital
$80M
Pro Forma Free Cash Flow
FOR STUDENTS
Investment in better educational experience and value for students
FOR SHAREHOLDERS
Expected $2/share annual dividend payout
Note: Pro Forma TTM ended September 30, 2017
16

Creating a National Leader in Education Innovation
Two regionally accredited independent universities
Combined platform facilitates accelerated investment in student experience and affordability
Highly achievable corporate cost synergies and strong cash flow drive shareholder value creation 17

18

Appendix: Reconciliation of Non-GAAP Financial Measures
The following information provides reconciliations of non-GAAP financial measures , which are presented in the accompanying presentation, to the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The companies have provided non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the accompanying presentation that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the presentation. The non-GAAP financial measures in the accompanying presentation may differ from similar measures used by other companies. The following tables reconcile the non-GAAP measure of Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) referred to in this presentation to the most directly comparable GAAP measure reflected in the Companies’ financial statements.
CAPELLA EDUCATION COMPANY (TTM ENDED 9/30) STRAYER EDUCATION INC (TTM ENDED 9/30) STRATEGIC EDUCATION INC (TTM ENDED 9/30)
Income from continuing operations $    42,146 Income from continuing operations $    38,825 Income from continuing operations $                80,971
Other (Income)/Expense, net (489) Other (Income)/Expense, net (230) Other (Income)/Expense, net (719) Income Tax Expense 23,336 Income Tax Expense 21,580 Income Tax Expense 44,916 Depreciation and Amortization 20,528 Depreciation and Amortization 18,259 Depreciation and Amortization 38,787 EBITDA $    85,520 EBITDA $    78,434 EBITDA $    163,954 Stock Based Compensation 6,172 Stock Based Compensation 12,006 Stock Based Compensation 18,178
EBITDA net of Share Based Compensation $    91,692 EBITDA net of Share Based Compensation $    90,440 EBITDA net of Share Based Compensation $    182,132
19

Appendix: Reconciliation of Non-GAAP Financial Measures
The following information provides reconciliations of non-GAAP financial measures , which are presented in the accompanying presentation, to the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The companies have provided non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the accompanying presentation that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the presentation. The non-GAAP financial measures in the accompanying presentation may differ from similar measures used by other companies. The following tables reconcile the non-GAAP measure of Free Cash Flow referred to in this presentation to the most directly comparable GAAP measure reflected in the companies’ financial statements.
CAPELLA EDUCATION COMPANY (TTM ENDED 9/30) STRAYER EDUCATION INC (TTM ENDED 9/30) STRATEGIC EDUCATION INC (TTM ENDED 9/30)
Net cash provided by operating Net cash provided by operating Net cash provided by operating $                64,644 $                58,775 $                123,419 activities—continuing operations activities—continuing operations activities—continuing operations
Capital expenditures (23,968) Capital expenditures (20,233) Capital expenditures (44,201)
Free cash flow $                40,676 Free cash flow $                38,542 Free cash flow $                79,218
20