Estacio Rises After Accepting Kroton’s Improved Takeover Offer

  • Takeover to create one of the world’s largest education groups
  • Deal still depends on approval from Brazil’s regulator

Estacio Participacoes SA extended a yearly rally after its board approved a takeover offer from Kroton Educacional SA that will create one of the biggest for-profit education companies in the world, with about 1.6 million students.

Estacio shares gained 3.3 percent to 17.16 reais at 11:41 a.m. in Sao Paulo, the best performance on the Ibovespa index for non-commodity companies. Kroton fell 1 percent to 13.98 reais after raising its offer for a third time. The proposal is valued at 5.98 billion reais ($1.8 billion).

"Estacio was able to get an offer that was very positive," said Luis Gustavo Pereira, an analyst at the brokerage Guide Investimentos in Sao Paulo. "The market is seeing the combination as a good opportunity."

The deal still requires shareholder approval and clearance from Brazil’s antitrust agency Cade, which will probably ask for some concessions since the agreement combines Brazil’s two largest for-profit education providers, Estacio Chairman Joao Cox said in an interview after the board meeting Friday evening.

Higher-education provider Ser Educacional SA, which had made competing offers for Estacio, gained 2.1 percent to 13.40 reais, its highest price since June 8.

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