Shares of Santa Ana-based Corinthian Colleges Inc. surged Thursday on speculation the embattled vocational school operator could be acquired.
Corinthian’s shares closed up 11% to a market value of nearly $480 million.
“The stock’s responding to headlines about takeover speculation,” William Nichols of Cantor Fitzgerald LP in New York told Bloomberg.
Options trading on Corinthian also has surged as some speculators bet the shares will rise further with a possible buyout bid.
Options trading is the highest since early 2006, according to Bloomberg.
Call buying—bets Corinthian’s shares will rise—dominate the options trading. The most active are call options to buy the shares for $6 in October.
The contracts are bets that Corinthian’s shares will rise to more than $6 next month and investors will pocket the difference.
Corinthian’s shares closed at $5.44 on Thursday.
Some could be betting on consolidation in the for-profit education sector, which is under the threat of potentially crippling regulation.
Corinthian runs more than 100 campuses in the U.S. and Canada that offer degrees in healthcare, criminal justice and other areas.
The company and other school operators saw big growth during the recession but have come under fire for students who took on more debt than they could afford.
Last month, an Education Department report showed that fewer than 20% of students at Corinthian and other schools are repaying federal loans.
The department plans to use the loan repayment figures to determine whether school operators can remain eligible for federal loans.
Corinthian gets the bulk of its revenue from students with federal loans.
