UPDATE 3-Brazil education M&A battle heats up as Kroton raises Estácio bid

martes 21 de junio de 2016 16:29 GYT

(Recasts to detail bids, comments from Ser Educacional, background throughout)

By Juliana Schincariol and Tatiana Bautzer

RIO DE JANEIRO/SAO PAULO, June 21 (Reuters) - The battle for control of Estácio Participações SA gained momentum on Tuesday as efforts by Brazil's No. 2 for-profit college operator to remain independent failed to prevent rivals from sweetening their bids.

Kroton Educacional SA on Tuesday improved by almost one-third its unsolicited offer for control of Estácio, originally unveiled on June 2. Reuters had reported Kroton's intention to raise its bid last week.

A source familiar with Kroton's plans said it had already garnered support from about 40 percent of Estácio's shareholders for the new proposal, which would be its definitive offer. Kroton is the world's largest education company by market capitalization.

The other bidder, Ser Educacional SA, may sweeten the terms of a merger proposal sent to Estácio's board on June 5, Chief Executive Jânyo Diniz told Reuters on Tuesday. He declined to elaborate on potential scenarios for a fresh bid.

The reaction from Kroton and Ser Educacional comes amid opposition from the Zaher family, Estácio's No. 2 shareholder. The family's patriarch, Chaim Zaher, was named Estácio's chief executive officer last week to help steer the company through the takeover bids and cut costs.

The fight for Estácio, a company with about 588,000 students and annual revenue of 4.3 billion reais, is setting the stage for what may turn into the fiercest unsolicited takeover battle in one of Brazil's fast-growing industries.

Analysts said Estácio's bloated cost structure, compared to that of rivals, makes it an alluring takeover target: a buyer will have ample room to cut costs and sharpen business focus on geographical and segment expansion.   Continuación...