Anhanguera Educacional SA, Brazil’s second-largest education company, soared the most since 2011 as its forecast for cost savings offset lower-than-forecast profit.
The shares jumped 10 percent to a record 15.19 reais at the close of trading in Sao Paulo, the biggest one-day advance since August 2011. Trading volume was 4.1 times the three-month average after Anhanguera said in a filing it expects 300 million reais ($129 million) in benefits over the next three years from the merger with Kroton Educacional SA, which agreed to buy its smaller rival for 5 billion reais in April.
Sixty percent of the synergies will come from cost cuts, with the rest tied to higher revenue and more efficient investment after the merger is complete, according to the filing. Anhanguera reported adjusted net income of 4.28 million reais in the three months ended in September, 93 percent below the average of five analyst estimates compiled by Bloomberg.
The forecast benefits from the merger are “significantly higher than the market was expecting,” Itau BBA analysts led by Thiago Macruz wrote in a research note today. “This might signal that both companies are confident in the merger’s potential even with the potential hurdles from Anhanguera’s operations.”