As Bidding War Rages, CEO of Brazil’s Estacio Suddenly Exits

  • Rivals Kroton, Ser Educacional have made bids for Estacio
  • Chaim Zaher takes over as interim CEO, replacing Rogerio Melzi

Estacio Participacoes SA said its top executive stepped down, adding a new level of intrigue at the for-profit education company that’s the target of a bidding war.

Rogerio Frota Melzi tendered his resignation Thursday, according to a regulatory filing. Chaim Zaher, who was part of the company’s board of directors and is one of its top shareholders, will leave his current post and replace Melzi as CEO.

Shares of the education provider rose 2.8 percent to 15.14 reais at 12:40 p.m. in Sao Paulo as investors speculated that Melzi’s departure could be a precursor to a deal. Melzi departed because of Estacio’s relatively poor performance, not because of the bids the company is considering, according to a research note from UBS AG citing a conference call Estacio held with analysts Thursday night.

Estacio is analyzing competing merger proposals. Smaller rival Ser Educacional SA sent a non-binding offer to combine with Estacio this month, a deal that would create the largest education group focused on in-person private higher-education in Brazil. The bid came just two days after the country’s biggest education operator, Kroton Educacional SA, announced its interest in acquiring Estacio for 3.48 billion reais ($968 million) in stock.

Melzi and other Estacio executives had been advocating in favor of a merger with Ser over Kroton, Valor Economico reported earlier this month.

While Kroton’s original offer of 0.977 share for each Estacio share didn’t provide any premium, the company would be willing to do so, a person with knowledge of the negotiations said earlier this month. Kroton would also consider including a clause to set the final terms of the deal prior to the approval of Brazil’s antitrust regulator Cade, the person said.

Melzi had been at Estacio since 2008, having acted as CEO since 2012, according to information available on the company’s website. Zaher has worked with education companies since the 1970s, and is the founder of Uniseb, which Estacio acquired in 2013.

Reuters reported on the change in Estacio’s management earlier Thursday.

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