Nelnet's CUnet to Buy Sparkroom - Analyst Blog

CUnet, a subsidiary of Nelnet Inc.’s (NNI), announced yesterday that it has agreed to acquire Sparkroom, a provider of enrollment marketing automation and lead performance management solutions. The transaction is expected to close on Feb. 1, 2010. Terms of the deal were not disclosed.

Sparkroom co-founders Jamie McDonald and Jamie Shulman will remain with the company and will continue to lead Sparkroom and its associates from Toronto.

The Nelnet subsidiary provides online performance media and interactive marketing services, which drives qualified student enquiries and enrollments for the higher education industry. Sparkroom’s Lead Performance Management product suite offers comprehensive technology tools to education marketers. The acquisition will help in offering an industry-leading mix of marketing services and technology solutions for educational institutions from a single provider.

This acquisition is a strategic fit for Nelnet, in our opinion. It will expand the company’s lead generation products and services business and strengthen its lead generation technology.

Nelnet is one of the premier education finance companies in the U.S. The company offers a broad range of student loans and financial services, along with technology-based products designed to simplify the student loan process by automating financial aid delivery, loan processing and funds disbursement.

However, in the near future, Nelnet could face uncertainty over the enactment of the legislation eliminating private lenders from the student loan market. This legislation could put an end to the Federal Family Education Loan Program and severely impact student lenders.

Besides Nelnet, other companies who could be at risk under the new legislation are SLM Corporation (SLM), Student Loan Corp. (STU), ITT Educational Services Inc. (ESI), SunTrust Banks Inc. (STI) and Corinthian Colleges Inc. (COCO).