What happened
Shares of Laureate Education (NASDAQ:LAUR) rose on Tuesday after the company announced that it would explore strategic alternatives for each of its businesses. The stock was up 15.8% at 1 p.m. EST.
So what
Laureate, which operates 150 campuses with 850,000 students mainly in Latin America, will explore all possible options for unlocking shareholder value. This includes sales, spin-offs, and business combinations. The company is already exploring the sale of its businesses in Peru, Mexico, and Australia.
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Laureate has previously divested higher-education institutions in the U.S., Europe, Asia, and Africa at accretive valuations. The company plans to use any after-tax proceeds from further divestitures to pay down debt and return capital to shareholders.
Along with the announcement, Laureate reiterated its guidance for the fourth quarter and full year. The company will report its results on Feb. 27.
Now what
Laureate is exploring strategic options because the company believes the market is undervaluing its assets. Some analysts agree, with Stifel seeing a sum-of-parts valuation of $28 per share, and Barclays seeing a range of $23 to $27. Including Tuesday's surge, the stock trades just above $20 per share.
While there's no guarantee Laureate will find buyers for its assets, at least at prices acceptable to the company, investors were optimistic enough to bid up the stock.
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