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Estacio Advances as Brazil Cancels Competitors’ Licenses

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Jan. 14 (Bloomberg) -- Estacio Participacoes SA, Brazil’s third-biggest education company by market value, rose the most in seven weeks as the country’s Education Ministry canceled operating licenses for two competitors in Rio de Janeiro state.

The Rio-based company’s shares rose 3.1 percent to 19.80 reais at the close of trading in Sao Paulo, the biggest one-day advance since Nov. 26. The Ibovespa equity benchmark added 0.6 percent.

The ministry cited poor quality as it canceled licenses for the for-profit Universidade Gama Filho and Centro Universitario da Cidade, both units of closely held Galileo Educacional, according to the official gazette today. The colleges have a combined 35,000 students who will have to transfer to other institutions, William Castro Alves, an analyst at brokerage firm XP Investimentos, wrote in a note to clients today.

“The decision is very beneficial for Estacio,” which is well-positioned to pick up the transfers because it already has half of its more than 300,000 students in the state of Rio, Alves wrote.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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