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Career Education jumps following Europe sale

NEW YORK (AP) -- Shares of Career Education surged Friday after the company said it will sell its European education business.

THE SPARK: The company said Tuesday that it will sell the European education division to private-equity firm Apax Partners. Career Education expects $276.5 million in net proceeds and said the deal should close before the end of 2013. The Schaumburg, Ill., company said it wants to focus on the U.S., where most of its students are based.

Apax Partners is acquiring INSEEC Group of Paris and the International University of Monaco. The European operations had revenues of $128.6 million last year, representing around 9 percent of Career Education's total, the company said.

THE BIG PICTURE: Career Education Corp. runs schools including Le Cordon Bleu North America and Colorado Technical University. Like the other for-profit education firms, it has faced public criticism in recent years over high drop-out rates, graduates' poor job prospects and high debt levels of its students. New federal regulations have led to lower enrollment at many for-profit schools. Career Education's student population fell 23 percent in 2012 and new student starts decreased 22 percent.

The company has been looking for way to cut costs. It took a loss of $142.4 million, or $2.15 per share, in 2012 as its revenue fell 21 percent to $1.49 billion. It has continued to lose money and students in 2013.

THE ANALYSIS: Wells Fargo analyst Trace Urdan upgraded the stock to "Outperform" from "Market Perform," saying the sale gives Career Education a stronger balance sheet and could focus on improving and focusing its U.S. business.

"The sale signals a boldness of action that we believe has been lacking for the past several years," he said.

SHARE ACTION: Shares of Career Education gained $2.14, or 56 percent, to $5.94 in afternoon trading, and earlier they reached an annual high of $6.50. Even with Friday's gains, the stock is still down 66 percent from its levels of two years ago.