Uniasselvi buys rival Unicesumar for more than R$ 3 billion, with an eye on distance learning

UniCesumar (Photo: Disclosure)

Listed on the Nasdaq Technology Exchange, in the USA, Vitru – controller of the Santa Catarina education group Uniasselvi – yesterday signed an agreement to buy 100% of the Paraná-based Unicesumar (Higher Education Center of Maringá) for an amount in excess of R$ 3 billion. The deal evaluates Unicesumar at R$3.23 billion, including debt of R$78 million. The asset was highly sought after in the market, as it is strong on two coveted fronts: distance learning and on-site medical courses.

According to a relevant fact, Unicesumar is a fast-growing higher education institution, focused on the distance education market, founded 30 years ago in Maringá (PR) and led by the Matos family. At the end of March, it had 760 service centers and 331 thousand students, including 314,000 in digital education.

Vitru guaranteed a firm credit line from the main Brazilian banks in the total amount of R$ 1.95 billion, with a term of five years, for the transaction. “We believe that the strong cash flow profile of both companies will allow for a smooth deleveraging (reduction in the level of indebtedness) over time,” says Vitru.

On the closing date of the deal, 62.9% of the agreed amount will be paid in cash and 19.4% with the issuance of new Vitru shares. The remaining 17.7% will be paid 12 months after closing, adjusted by the IPCA, the official price index of the Brazilian Institute of Geography and Statistics (IBGE). The current Unicesumar shareholders will hold 23.6% of the educational group’s capital.

According to the last higher education census, released in September last year by the Ministry of Education (MEC), Uniasselvi and Unicesumar were the two fastest growing institutions in the so-called private digital education. “Unicesumar also has a considerable presence in on-site courses related to health, mainly Medicine, with more than 1,600 students in 348 current medical vacancies that are still in the expansion phase”, points out the company. The opening of new vacancies in the area, in fact, may yield a bonus to sellers.

Unicesumar’s current net revenue for the 12 months ended March 2021 was R$762 million, while adjusted EBITDA (or cash generation, measured by earnings before interest, taxes, depreciation and amortization) totaled R$260 million. The transaction must be approved by antitrust authorities, including the Administrative Council for Economic Defense (Cade).

As part of the governance agreements, Wilson Matos, dean and president of Unicesumar, will become the chancellor and vice chairman of the board of Vitru, while Weslley Silva, currently director of institutional relations at Unicesumar, will become a board member. In addition, Willian Mattos, head of distance education at Unicesumar, will be named co-president of Vitru and will lead the company together with the current CEO of Vitru, Pedro Graça.

national strength

With the acquisition, Vitru will reach a total of 635,000 students and will position itself in the fight for first place in higher education in Brazil, along with Yduqs (YDUQ3; which had 661,000 students in 2020) and Cogna (COGN3; asset =768 thousand). However, the latter has been losing students since the beginning of the pandemic compared to rivals in distance learning.

“With this transaction, I would say that Vitru becomes almost an unbeatable giant”, says William Klein, president of Hoper Educação Consulting. “She and Unicesumar are the best to offer students in blended education, with a high-quality model.”

According to the specialist, companies have strong synergies not only in geographic operations (Vitru is stronger in the North and Northeast, while Unicesumar has a presence in the South). So much so that Klein does not expect that significant divestments are needed to approve the transaction at Cade.

“If there are medicines, there will be few, because the operations are very complementary. Unicesumar even has a more expensive ticket, with a more premium character. It is the ideal model, especially in this post-pandemic context”, he points out.

According to an education sector analyst at an investment bank, the operation is well regarded by the market, as distance learning is more profitable and should gain more and more space in private higher education. “Vitru was already the industry’s favorite in relation to digital education and is now conquering even more space”, he says.

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