Cade accepts enchantment in opposition to merger Rede D’Or – Sul América; analysts see attainable noise out there
This Tuesday morning (29), the General Superintendence of the Administrative Council for Economic Defense (Cade) issued a statement accepting the appeals of private health institutions to revisit the approval without medicine of the acquisition of Sul América (SULA11) by Rede D ‘Or (RDOR3), which were sent 5 days ago to the municipality.
On November 7, Cade’s General Superintendence approved, without restrictions, the transfer of share control of companies controlled by Sul América to Rede D’Or. Objections to the operation could be presented within 15 days by third parties or by Cade’s administrative court, before the decision is considered final.
JPMorgan pointed out in a brief note that it continues with the view that it is unlikely that Cade will change its decision, since 1) it was quite vehement in its statements about approval, at the same time that it stated that the new vertically integrated group could bring benefits to private healthcare sector beneficiaries, and 2) there is no market concentration of up to 30% in any region or industry vertical in which the new company will operate.
“Even so, the ongoing discussion should bring noise to the case and the incorporation of Sul América should be postponed to the second or third quarter, compared to the previous forecast for the first quarter, since Cade’s deadline to re-analyze the deal is May 23”, analysts assess.
Now, Rede D’Or has ten days to respond to the new requests from the antitrust agency and there are pending approvals from the ANS (private health regulator) and the Central Bank, which should not bring problematic questions about the operation. JPMorgan reinforced the overweight recommendation (exposure above the market average, equivalent to buying) for RDOR3 assets, being its top pick in the health sector.
Itaú BBA also pointed out that the news does not change its view on the approval of the deal. “Appeals from competitors were expected and the filing of appeals could be seen as a formality. However, this could still generate some noise in the market because investors may see the news as an indication of a longer time for the deal to be fully approved or that possible remedies could be applied. We are still confident that the deal will be approved”, points out the BBI.
After opening lower this Tuesday, shares closed higher, following the greater optimism of the Ibovespa as a whole. Assets RDOR3 rose 3.35%, to BRL 30.23, while SULA11 advanced 1.77%, to BRL 21.89.