Kroton Cuts Anhanguera Offer to $3.1 Billion After Premium Rises

Kroton Educacional SA cut its offer for Anhanguera Educacional Participacoes SA, triggering a rally as investors bet the all-stock deal between Brazil’s top two education companies has a better chance of being completed.

Kroton, the world’s biggest company in the industry by market value, will swap 0.3097 of its common shares for every Anhanguera share, down from an original ratio of 0.4548, according to a regulatory filing today. The new offer values Anhanguera at about 7 billion reais ($3.1 billion), compared with about 10.2 billion reais under the old terms, based on yesterday’s closing price.

The premium for Anhanguera shares had surged to 64 percent yesterday from less than 1 percent when the deal was announced in April 2013 after Kroton shares more than doubled in the period, raising speculation the offer would be withdrawn. Anhanguera had climbed just 25 percent in the period.

“The deal could have fallen through without the agreement on a different swap ratio, so this problem seems to be solved,” Luis Gustavo Pereira, a strategist at brokerage Guide Investimentos, said by phone from Sao Paulo. “Anhanguera has really underperformed Kroton, so it would have been hard for them to keep the initial terms unchanged.”

Anhanguera rallied 6.3 percent to 15.1 reais in Sao Paulo at close, the biggest gain in Sao Paulo, while Kroton rose 5.2 percent to 54.06 reais.

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