Afya, Yduqs Merge to Create Brazilian Education Powerhouse

In a transformative move set to reshape Brazil's higher education sector, Afya and Yduqs have agreed to merge, creating a dominant force with nationwide reach. This strategic combination, long anticipated by market observers, unites Afya's specialized medical education ecosystem with Yduqs' extensive network of higher learning institutions, including prominent brands like Estácio, IBMEC, and Wyden.

The transaction, structured as a share exchange, will see Afya shareholders receive 69% of the combined entity, while Yduqs shareholders will hold the remaining 31%. As part of the deal, Afya will delist from the Nasdaq. This merger represents a significant consolidation within the Brazilian education market, a sector that has seen increasing interest from private equity and strategic investors seeking scale and operational efficiencies. The combined company is projected to achieve synergies valued at over R$ 2 billion, primarily from administrative cost reductions and capital expenditure optimization.

Shareholders of Yduqs are set to benefit from a substantial premium, with the exchange ratio reflecting a 45% uplift compared to the 30-day weighted average trading price prior to the public disclosure of negotiations. This premium significantly surpasses the typical 18% seen in comparable Brazilian share-swap transactions. Furthermore, the agreement stipulates that both companies will distribute all cash generated between the signing and closing of the deal, estimated to be a 12-month period. For Yduqs, this guarantees a minimum distribution of R$ 750 million, equating to an attractive dividend yield of 38%.

The strategic rationale behind the merger is compelling. Afya CEO Virgilio Gibbon highlighted the significant complementarity, stating, "We now have national coverage; a strong focus on premium courses, with 55% of the new company's revenue and 66% of its EBITDA originating from medicine and IBMEC; and we will have the opportunity to roll out our digital health ecosystem across Yduqs." This integration is expected to bolster Yduqs' medical programs, particularly addressing underutilization in its Idomed division by leveraging Afya's proven 100% occupancy rate in its medical programs.

Beyond immediate operational gains, the merged entity is poised for expanded inorganic growth opportunities. Virgilio noted that the broader portfolio now allows exploration beyond medicine, including the premium IBMEC brand for expansion into fields like administration and law, as well as the scalable distance and in-person learning platforms under the Estácio and Wyden banners. Yduqs CEO Rossano Marques echoed this sentiment, emphasizing the necessity of consolidation and the unique synergy of this partnership, which provides a truly nationwide campus footprint.

The transaction is also anticipated to enhance market liquidity. With Afya's Nasdaq trading volume averaging R$ 5 million daily and Yduqs' R$ 35 million, the combined entity could see daily liquidity approach R$ 70 million, potentially becoming the most liquid stock in Brazil's education sector and qualifying for inclusion in major market indices. Governance will remain stable, with the four largest shareholders from both sides entering into a four-year shareholder agreement. Bertelsmann, the German group holding 65% of Afya, will continue as the controlling shareholder with approximately 50% of the new company. Other key stakeholders include the Esteves family (10.5% of Afya), Advent (17% of Yduqs), and the Zaher family (15% of Yduqs).

Kay Krafft, current co-chairman of Afya and CEO of Bertelsmann Education Group, will serve as chairman of the new company. Virgilio Gibbon will lead as CEO, while Rossano Marques will head higher education programs excluding medicine. Financial advisory was provided by Bank of America for Afya and BTG Pactual for Yduqs, with legal counsel from Demarest Advogados and Lobo de Rizzo e Spinelli Advogados, respectively.