Career Education sells business for more than its own market cap
(Reuters) - Career Education Corp (CECO.O) said it will sell its European education business to private equity firm Apax Partners for about $305 million, sending its shares up more than 50 percent in extended trading on Thursday.
The deal - valued at more than Career Education's market capitalization - includes its entire international schools business, comprising the Paris-based INSEEC Group and the International University of Monaco.
The company said it plans to use the proceeds from the deal to concentrate on growing its business in the United States.
"It will help us best serve the vast majority of our students, who are U.S.-based," Chief Executive Scott Steffey said in a statement.
As well as battling losses and falling enrollment, the $25 billion U.S. for-profit education industry has been stung by government investigations into high student-debt loads and low graduation rates.
Career Education agreed in August to pay $10.25 million to settle a New York state probe into accusations that it had inflated job placement rates to attract students.
However, University of Phoenix owner Apollo Group Inc (APOL.O) said this week that the rate at which student enrollments were falling had slowed in the quarter ended September 30.
Career Education will receive about $276.5 million when the deal closes, taking into account various adjustments, the company said on Thursday.
Morgan Stanley & Co LLC acted as Career Education`s financial adviser for the deal.
The company's shares, which have gained about 14 percent in the past year, were trading at $5.90 at 06.19 p.m. ET, after closing at $3.80 on the Nasdaq.
At $3.80, the company had a market value of about $255 million.
(Reporting by Rohit T. K. in Bangalore; Editing by Ted Kerr)
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