Fleury Surges as Controlling Holder Explores Alternatives

Fleury SA surged the most in three years after the Brazilian medical service provider’s controlling shareholder hired JPMorgan Chase & Co. to assess strategic alternatives for its stake in the company.

The shares climbed 8.9 percent to 19 reais at the close of trading in Sao Paulo, the biggest advance since August 2010. It was the third-biggest gainer on the BM&FBovespa Small Cap index, which rose 2.9 percent.

Core Participacoes SA hired JPMorgan’s Brazilian unit to assess “strategic alternatives regarding its stake” in Fleury, “including potential entry of new investors in Core,” according to a regulatory filing today. The investment company owns about three-quarters of the publicly traded stock, according to its website. Fleury’s press office didn’t reply to a phone call seeking comment.

“There’s a whole range of possibilities,” Pedro Galdi, the head strategist at SLW Corretora, said by phone from Sao Paulo. “They could sell their whole stake, or a part of it, merge with another company. Every time a controlling shareholder sells their stake, there’s a possibility of a tag along, so investors could be buying into the stock expecting that premium.”

Under Brazilian securities rules, owners of voting stock are entitled to receive at least 80 percent of the price paid to controlling stakeholders if the company is bought, the so-called tag along.

Fleury soared 6.8 percent on Oct. 24 after Exame magazine reported the company was looking for a buyer, without saying how it got the information. The company said it doesn’t comment on market speculation when contacted by Bloomberg News at the time.