A bidding war for Estacio (BSP:ESTC3) erupted in early June after Kroton Educacional and Ser, two of Estacio’s peers, made non-binding merger offers for the company. In mid-June, Estacio’s chief executive officer resigned and was replaced on an interim basis by a member of the Zaher family. This development magnified the bidding war as there has been speculation that the Zaher family, which owns 14% of Estacio, is also considering a possible tender offer for 36%-61% of the company in order to acquire majority control.
While the situation is ongoing, shares of Estacio and Kroton (BSP:KROT3) have appreciated materially on the news of the potential acquisition. The merger between the two companies could produce meaningful synergies, including scale and operational improvements, especially considering Kroton’s margins are materially higher than Estacio’s.
From Brandes' Emerging Markets Fund second quarter 2016 commentary.
