Afya (AFYA) M&A announcement summary

Deal rationale and strategic fit

• Merger creates Brazil's largest higher education platform, spanning all 26 states, with a strong focus on premium and medical education segments and R$9.4bn in revenue.

• Combines complementary brands and geographical footprints, expanding the total addressable market and mitigating concentration risk.

• Unlocks new growth avenues in medical, health-related, and premium education, leveraging Afya's continuing education and YDUQS' Ibmec brand.

• Enhances resilience and diversification across programs and geographies, increasing resistance to economic and regulatory cycles.

• Supported by seasoned leadership and long-term strategic shareholders, including Bertelsmann.

Financial terms and conditions

• All-stock business combination: Afya merges into YDUQS, with Afya shareholders receiving 6.408347 new YDUQS shares per Afya share and holding 69% of the combined company; YDUQS shareholders hold 31%.

• Transaction offers a 45% premium to VWAP as of the last unaffected date, plus an extraordinary dividend of BRL 750 million between signing and closing.

• Pre-closing, each company distributes 100% of its FCFE to its own shareholders; Afya may top up its distribution to maintain the agreed ownership split.

• Bertelsmann will hold 47.4% of the Combined Company.

• Break-up fees: R$325 million pre-approval, R$650 million post-approval, under specified conditions.

Synergies and expected cost savings

• Estimated BRL 2–2.2 billion in synergies (NPV, net of Pillar Two), about 25% of combined market cap, with 80% expected to be captured within three years.

• Synergies stem from scalable costs, shared services, ERP/IT consolidation, SG&A optimization, and best practices.

• Revenue upside not included in synergy NPV; main levers are continuing education, expanded campus network, and cross-selling.

• One-time integration costs mainly from IT, severance, and transition expenses.