Estacio Advances as Brazil Cancels Competitors’ Licenses

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.

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