SAO PAULO, June 5 (Reuters) - Estácio Participações SA has gone from being predator to prey, as a recent share slump left Brazil’s No. 2 for-profit college operator vulnerable to a flurry of unsolicited takeover bids from larger and smaller rivals alike.
Rio de Janeiro-based Estácio received a second takeover offer in four days on Sunday, when Ser Educacional SA placed a non-binding merger bid. Kroton Educacional SA had made a preliminary all-stock deal valued at 3.37 billion reais ($956 million) on Thursday.
Estácio, the byproduct of a series of acquisitions in recent years, said in a securities filing on Sunday that a three-member committee had been appointed to analyze both bids and, if necessary, make a counteroffer to “maximize shareholder value”.
Slowing revenue growth drove Estácio’s stock down 21 percent in the year through Wednesday, the day before Kroton’s bid was announced. By contrast, profit resilience has helped bolster the shares of Kroton and Ser Educacional, which gained 18 percent and 51 percent, respectively, in the same period.
The proposals are setting the stage for what may become the largest hostile takeover in Brazil’s fast-growing education sector. Interest for Estácio underpins the strength of for-profit college operators even as a two-year recession stoked student delinquencies and led the government to cut student loan subsidies.
Both offers, however, face tough antitrust scrutiny, as a prior round of takeovers left market leader Kroton with twice as many students as Estácio, and a likely rejection from Estácio shareholders. Shares of Estácio are up 36 percent since Thursday, suggesting investors expect suitors to sweeten offers.
“Disclosing a potential takeover like this without properly preparing the ground, like more structured terms, for instance, creates uncertainties and leaves room for defensive moves by Estácio,” Victor Schabbel, an analyst with Credit Suisse Securities, said of the Kroton offer.
In a separate filing, Ser Educational offered to pay Estácio shareholders a one-time dividend worth 590 million reais. Kroton has yet to present a formal, non-binding offer.
The battle for Estácio is also pitting Brazil’s top banks and law firms against one another.
The investment-banking arms of Itaú Unibanco Holding SA and Credit Suisse Group AG are advising Kroton and Ser Educational on their unsolicited proposals. Grupo BTG Pactual SA, Brazil’s No. 1 independent investment bank, is Estácio’s advisor.
Executives at Ser Educacional, based in the Brazilian northeastern city of Recife, will detail the Estácio offer to investors at a Monday conference call.
$1 = 3.5268 Brazilian reais Reporting by Guillermo Parra-Bernal; Additional reporting by Jeb Blount in Rio de Janeiro; Editing by Muralikumar Anantharaman