Agreement likely this week for DSU to acquire Wesley College
DOVER – Delaware State University will sign a definitive agreement as soon as this week to acquire Wesley College in a deal that would still require overcoming multiple hurdles before it’s finalized, according to several sources with knowledge of the deal who weren’t at liberty to speak on the record.
The agreement, which Delaware Business Times was first to report in early June, is likely to be signed during the week of July 6, they said.
In addition to DSU not being asked for a cash payment from its balance sheet, it will get a 50-acre, 20-building campus with an appraised value of $33 million and fairly low debt service. DSU will also be looking to renegotiate contracts with shared vendors, including food service provider Aramark and IT vendor Ellucian.
The boards of both schools met in late June to authorize their respective leaders – DSU President Tony Allen and Wesley President Bob Clark – to negotiate a deal that would be the first time one of the nation’s Historically Black Colleges and Universities (HBCUs) has acquired another school.
The acquisition would turbo-charge DSU’s growth plans. Sources familiar with the deal say the university, which has just over 5,000 students believes it can retain the 900 to 1,000 Wesley students who will pay just over $27,000 for the 2020-21 school year, compared with DSU’s published tuition and fees of $8,258 for in-state students and $17,294 for out-of-state students.
In presentations to the state legislature’s Joint Finance and Bond Bill committees earlier this year, Allen reported that DSU has grown 40% over the last decade.
“That runs counter to what’s happening at other colleges and universities nationally, which have lost 5.3% of their student bodies over the same time period,” he said.
By comparison, undergraduate enrollment at Wesley was 1,035 for fall 2019, compared with 1,228 for fall 2018, 1,447 for fall 2017, and 1,600 for fall 2013, according to its website.
One of the biggest concerns going into the discussions was whether the two student bodies were compatible. However, Wesley is a “minority-serving institution,” which is a federal designation and emblematic of their student demographic profile.
Wesley’s nursing program is considered one of the best in the state and provides a large portion of Delaware’s health care workforce. Its accredited Master of Occupational Therapy program, which Wesley started when Clark arrived at the university, is the only one in the region. In 2019, the school had roughly 400 to 500 applicants vying for 40 nursing program slots, and its first class from the occupational therapy program had a 2019 pass rate of 100%, which is significantly higher than the national average, Clark said.
DSU has had similar pass rates, according to the school’s website.
During Clark’s tenure, Wesley has reduced expenses and improved its range of academic offerings, but it has been battling well-documented financial challenges, including declining enrollment and falling revenue, a situation that was not helped by the university needing to refund room and board costs to students during the pandemic.
Clark said in September that Wesley has reduced operating expenses by close to $3 million, “looking at everything from how you handle consumables to what types of lights you use.”
After his arrival, the school started renting out its residence halls during the summer. The first year, it grossed around $145,000, made a few changes, and it was expected to generate nearly $300,000 in 2019.
DSU commissioned an economic-impact study in 2017 through the University of Delaware that estimated DSU contributed $266 million per year to the state economy. That figure could increase 30% to 40% with the acquisition of Wesley, a figure that aligns with information Clark gave DBT in September.
Clark, the former commandant of the U.S. Naval Academy who came to Wesley in 2015, has argued that Wesley, a private school, should be eligible for state funding since more than 50% of its students are Delawareans and more than 80% of its graduates stay in Delaware after graduation.
“Wesley employs 500 people from full professors, students, staff, maintenance, adjuncts, and we provide $80 million a year – and that’s conservative – to our region,” he added in the interview last year.
Since 2018, the private college has received a total of $6.375 million from the state, which did provide a bit of a lifeline earlier this year when it agreed to let Wesley receive up to $3 million, buying the school additional time to find a merger or acquisition partner. It has accessed about $1.8 million of that amount.
Clark has been looking for a dance partner for more than a year. In addition to discussions with the University of Delaware that UD reported went nowhere, Wesley reportedly had discussions in February with Central Florida-based Saint Leo’s University, a Catholic university that aspires to become one of the largest faith-based universities in the United States.
Over the past few years, Saint Leo’s has walked away from other acquisition deals with schools in similar situations to Wesley. The Florida-based private university with 35 regional locations across seven states is closing 17 campuses and shift solely online, according to a university statement sent to the Tampa Bay Times newspaper.
This is a developing story and will be updated throughout the week.
By Peter Osborne