Anhanguera Educacional Participacoes SA (AEDU3) fell the most on the Ibovespa as antitrust regulators sought concessions to approve a merger with Kroton Educacional SA (KROT3) that would create the world’s largest for-profit education company.
Anhanguera, the country’s second-biggest education company by market value, declined 3.7 percent to 14.48 reais at 11:38 a.m. in Sao Paulo. Kroton, the larger rival that announced its plan to purchase Anhanguera in April, lost 1.7 percent to 37.66 reais after earlier falling as much as 5.7 percent. Brazil’s benchmark stock index was little changed.
The chief of the antitrust agency, known as Cade, asked the regulator’s court to seek concessions from the companies to bolster competition before approving the 5 billion real ($2.11 billion) merger. While the antitrust chief makes recommendations, the agency’s court, which operates independently, makes the final ruling.
The conditions required for the merger may be applied with or without an agreement with both companies, according to an e-mailed press release from Cade, citing an analysis of the case by its general superintendent.
“The companies are seeking to negotiate a solution,” Kroton and Anhanguera said in a joint regulatory filing.
Cade’s superintendent said in the statement that the deal “generates high concentration” in some markets, and “if approved with no restrictions, could cause harm to students in some courses and cities such as increases in prices, reduction in the offering of services and decline in quality of education.”
Kroton shares jumped 52 percent since the merger was announced on April 22 through yesterday and Anhanguera gained 32 percent during that period.
To contact the reporter on this story: Denyse Godoy in Sao Paulo at firstname.lastname@example.org