Capella will dismiss nearly 10 percent of workforce as a result of merger

Capella Education which last week merged with another for-profit education firm, Strayer Education, plans to lay off 125-plus headquarters employees as part of the consolidation.

Executives of what is now called "Strategic Education," said in a Star Tribune interview last week that, within 18 months, they planned to cut $50 million out of their combined annual expense base of about $800 million.

On Monday, the company confirmed that its Minneapolis employment will shrink from about 1,400 to "between 1,300 and 1,200 jobs," according to spokesman Mike Buttry.

"We aren't planning more job eliminations due to the merger," Buttry said in an email response.

"The jobs were in overlapping corporate functions like finance, IT, HR, legal and public affairs."

Strategic Education combines two of the most successful for-profit education companies.

Capella, founded in Minneapolis 25 years ago, is a pioneer in internet-based teaching. Most of its 38,000 students are pursuing graduate degrees in professional fields such as business, health sciences and information technology.

The Twin Cities concedes the headquarters to Virginia-based Strayer.

Capella University will remain based in Minneapolis as will the IT operations of the combined firm.

The stock transaction was valued at $1.2 billion. Capella's stock ran from about $65 per share when the deal was announced last October to $104 per share at the time of the transactiion.

CEO Karl McDonnell of Strayer, became CEO of the combined firm. Capella CEO Kevin Gilligan became vice chairman of the board.

Gilligan, who has run Capella since 2009, earned total compensation last year of $5.3 million. He is expected to receive $19 million in severance and accelerated stock awards.