Laureate Concludes INTI Education Group Divestment for $140M
In a bid to focus more on core markets, Laureate Education, Inc. LAUR announced the completion of the sale of INTI Education Holdings Sdn. Bhd. and its subsidiaries (INTI Education Group) to HOPE Education Group (Hong Kong) Company Limited for $140 million.
Net proceeds from the transaction are expected to be $120 million, after a $14-million payment to a minority equity shareholder and other fees.
In 2017, Laureate initiated the divestiture of subsidiaries in the Rest of World and Central America segments. Again in August 2018, it planned to divest its subsidiaries located in Europe, Asia and Central America. Post completion of these divestures, the company will be focusing on subsidiaries in Brazil, Chile, Mexico and Peru, the Online and Partnerships unit, as well as institutions in Australia and New Zealand.
Notably, the divestitures represent a strategic shift that had a major effect on the company's operations and financial results. Until Jun 30, 2020, it closed subsidiaries in 13 markets and four other institutions.
Price Performance
Shares of Laureate have gained 30.7% in the past three months compared with the industry’s 8.6% rally. The upside was primarily backed by better-than-expected earnings and revenues for second-quarter 2020, which topped analysts’ expectations by 55.6% and 0.6%, respectively. Also, its focus on delivering better results and improved business model are encouraging.
The company announced that it will sell a few of its operations located in Australian, New Zealand, Brazil and Minnesota. The Torrens University and Think Education in Australia, along with Media Design School in New Zealand are being purchased by a leading educational service provider, Strategic Education, Inc. STRA. Minnesota-based Walden University is being sold to Adtalem Global Education Inc. ATGE. The Brazilian operations, which include 11 higher-education institutions, are purchased by Ser Educacional S.A.
Although these initiatives are likely to put pressure on the company’s results in the upcoming quarters, we believe that the same will position it well in the long run.
Zacks Rank
Laureate — which shares space with American Public Education, Inc. APEI in the Zacks Schools industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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