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Shareholders of Edison Schools Inc. approved a buyout Wednesday that will make the Florida pension fund the lead investor in the controversial company.
New York money manager Liberty Partners put together the deal to take Edison private by buying the outstanding shares for $1.76 apiece. The pension fund, which is Liberty's only client, is putting up most of the $182-million price tag. Liberty also is investing some of its own money and other investors may be brought in later. Edison founder Chris Whittle will have a small stake in the new company.
Liberty's investment strategy is to buy a struggling company, improve its results, then sell it at a profit. Edison, which operates public schools, summer and after-school programs under contracts with school boards, has had only one profitable quarter in its 11-year existence.
"Today's vote is an exciting new chapter in Edison's history," Whittle said.
But Florida public employees continued to protest what they see as a high-risk investment. Ten went to New York City for the Edison shareholders' meeting Wednesday and asked pointed questions about Whittle's compensation, the company's accountability to its investors and the terms of the deal. Fortune magazine calculated that Whittle stands to collect as much as $21-million from the transaction.
Edison chairman Benno Schmidt Jr. said a special committee studied the transaction and found it to be in the best interests of Edison shareholders. However, some of them also opposed the deal, calling the price too low. Two-thirds of Edison shareholders voted in favor of the merger, with 14 percent voting against it and 20 percent not voting.
Outside the meeting, New York members of some of the unions that also represent Florida employees joined the Florida delegation in protesting the way the $95-billion Florida pension fund is run. The state Board of Administration administers the fund, reporting to a board consisting of the governor and two other top elected officials.
"The theme of the protest was that you've got to have employee representation on a retirement board," said Florida Education Association spokesman Mark Pudlow. He said there already have been discussions with legislators about changing the law to allow that.
In addition, he said public employees will be watching the pension fund and Liberty Partners more closely in the future. Although the board of administration says it is happy with Liberty and its investment results, a consultants' report last year criticized the company for taking too much risk, charging high fees and keeping sloppy records.
"We realize that we have to be real aggressive in checking on our retirement fund," Pudlow said.
- Helen Huntley can be reached at huntley@sptimes.com or 727 893-8230.