DeVry shares up on buyback, board and acquisition
DOWNERS GROVE, Ill. (AP) — DeVry Inc.'s shares jumped Wednesday after the struggling for-profit education company announced the acquisition of a Brazilian school, a new share repurchase program and the nomination of a university president to a seat on its board.
THE SPARK: The company, which owns schools including DeVry University and The Carrington Colleges, said late Tuesday that it plans to buy back up to $100 million of its common stock through 2014. The buyback will start when an existing $100 million program is complete.
It also said that longtime board member Julia McGee will not stand for reelection. The company nominated Alan Merten, president of George Mason University, to fill the open seat. Shareholders will vote on the board of directors at the company's annual meeting on Nov. 7.
The company also said it has acquired a Brazilian school, Faculdade do Vale do Ipojuca, which has roughly 5,000 students. DeVry did not disclose the financial details.
THE BIG PICTURE: Investors are looking for any sign of change or good news at for-profit education companies. The entire industry is struggling with intense criticism and new regulations, which have led to lower revenue.
Enrollment grew at these schools during the recession but scrutiny increased. A growing number of critics say for-profit schools are graduating students with too much debt and too few job opportunities. Many charge they aren't ensuring that enough students graduate.
Companies say the criticism has hurt enrollment but they are also feeling the effect of new federal regulations aimed at helping students find jobs and repay debt. Schools who fail to meet the rules risk losing federal money. In turn, most for-profit education companies have stiffened enrollment guidelines but that has taken a toll on revenue.
DeVry reported in August that its fourth-quarter profit plunged on lower enrollment, restructuring expenses and other charges. The company also has cut jobs to cope with its enrollment decline.
SHARE ACTION: Shares jumped more than 5 percent to $20.25 by late afternoon. Its shares have fallen 50 percent in the past year.