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Bloomberg
Two of Brazil’s biggest education companies are facing off in a quest to merge with Estacio Participacoes SA, the country’s second-largest for-profit firm.
Ser Educacional SA sent a non-binding proposal to combine with Estacio, a deal that would create the largest education group focused on in-person private higher-education in Brazil, the company said on Sunday in a corporate filing.
The offer came Saturday, two days after the country’s biggest education group, Kroton Educacional SA, announced its interest in acquiring Estacio for 3.48 billion reais ($968 million) in stock. Estacio and Kroton shares surged after the announcement on Thursday.
The Brazilian education companies are considering mergers as government cutbacks threaten a key source of financing for students, weighing on stock prices.
In Kroton’s proposal, investors would get 0.977 share of the company for each share they hold in Estacio, according to a filing. Kroton’s proposal wouldn’t represent a premium for Estacio, which was valued at 3.5 billion reais at the close of trading Wednesday, compared with Kroton’s 18.2 billion reais at the time.
Ser is valued at about 1.5 billion reais, making it smaller than Estacio.
While the company didn’t provide terms of its proposal, it said Estacio’s shareholders would own 68.7 percent of the new combined company, with Ser’s shareholders holding the rest. Estacio shareholders would get extra dividend payments of 590 million reais under Ser’s offer, or 1.92 real per share, Ser said in the filing.
Estacio said in a filing Sunday that it has created a committee that will evaluate both proposals.
The company hired Banco BTG Pactual as a financial adviser and law firm Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados as a legal adviser, according to the filing.