Yduqs Participações (YDUQ3) M&A announcement summary

Deal rationale and strategic fit

• Merger creates Brazil's largest higher education platform, serving up to 1.6 million students across 176 campuses in all 26 states, with nearly 6,000 medical seats and a strong focus on premium and medical education.

• The combined entity leverages complementary strengths, covering the entire medical career journey and broadening exposure to resilient, high-margin segments.

• Premium revenue mix increases from 32% to 55%, with growth avenues in hybrid, Ibmec, medical specialization, and lifelong learning.

• The organizations have complementary geographic footprints with limited overlap, enhancing national reach and operational efficiency.

• The new company aims to expand social impact, including free medical consultations and support for underserved regions.

Financial terms and conditions

• Stock-for-stock merger with Afya shareholders owning 69% and YDUQS shareholders 31% of the combined company; Bertelsmann will be the largest shareholder with 47%.

• 45% premium to 30-day VWAP for YDUQS shareholders, plus an extraordinary dividend of BRL 750 million distributed before closing.

• Combined company projected to generate up to BRL 9.5 billion in net revenue and BRL 3.6 billion in EBITDA, with pro forma leverage of 1.2x net debt/EBITDA.

• Target payout ratio of 50% and significant dividend yield, with minimum shareholding requirements for board positions.

• Novo Mercado governance standards and committed anchor shareholders from both companies.

Synergies and expected cost savings

• Estimated BRL 2–2.2 billion in synergies (NPV), with 80% expected to be captured within three years, validated by an international consulting firm.

• Synergies from SG&A optimization, IT consolidation, CAPEX avoidance, shared services, and scalable cost structures.

• Additional upside potential from revenue synergies, especially in continuing education, cross-selling, and national presence.

• The merger leverages over 400 technology and AI use cases already in production to drive innovation.

• The combined entity is expected to create a resilient portfolio with robust cash generation and greater capacity to invest in quality, technology, and innovation.