Afya e Yduqs se unem; sinergias podem passar dos R$ 2 bi

Afya and Yduqs are merging in Brazil's largest education M&A transaction, creating a sector giant with nationwide presence and premium course focus. The deal, rumored since August, will see Afya, a leader in medical undergraduate education, trade shares with Yduqs, a major higher education group owning brands such as Estácio, IBMEC, and Wyden.

Afya will hold 69% of the combined company, while Yduqs receives 31%. Afya will delist from Nasdaq and become part of Yduqs. The deal represents a 45% premium to Yduqs' weighted average price of its last 30 trades before August 21, when talks became public. Yduqs shareholders will receive a minimum of R$750 million in cash from the signing to closing of the transaction, equivalent to a 38% dividend yield.

If Yduqs generates less cash, Afya will increase its distribution to maintain the swap ratio. The combined companies estimate a net present value of R$2-2.2 billion in synergies, considering only SG&A, costs, and capex efficiency. With the 45% premium, Afya is paying 3.8x for an asset previously valued at 3.3x. The final multiple will likely be below 3x, with Afya paying around R$1 million for each medical course vacancy at Yduqs, a price point in the range of R$1.8 million for similar M&As in the sector.

The CEO of Afya, Virgilio Gibbon, described the complementary strengths of the two companies, including Afya's nationwide coverage, premium course focus, and Yduqs' high-EBITDA segments. The Yduqs CEO, Rossano Marques, noted the deal as a necessary consolidation move for the sector, with unique synergies in brand IBMEC, a premium brand with potential in law and administration, and the scalable digital health ecosystem Afya offers.