With a test for BRL 825 million, Afya closes the largest acquisition in its historical past

In the 20th acquisition since its IPO, the medical education group buys Del Rey, a company that includes UNIT Alagoas and FITS Jaboatão dos Guararapes, and reinforces its presence in the Northeast

Since going public on Nasdaq in July 2019, Brazilian medical education group Afya has pressed the button for an intense M&As strategy, which has translated into 19 acquisitions in the medical education area, its core business, and in the healthechs field. .

On the morning of this Thursday, October 13, the company again brought news on this front with an agreement that, in addition to reinforcing this package, translates the largest investment ever made by the company in an acquisition.

Afya announced the purchase of Del Rey, a company that encompasses the operations of Centro Universitário Tiradentes Alagoas (UNIT Alagoas) and Faculdade Tiradentes Jaboatão dos Guararapes (FITS Jaboatão dos Guararapes), from Pernambuco, in a transaction valued at R$825 million, before deducting the net debt that will be calculated on the closing date of the transaction.

Under the terms of the agreement, the amount will be paid as follows: BRL 575 million in cash on the date of completion of the acquisition and BRL 250 million in three annual installments, respectively, of BRL 150 million, BRL 50 million and BRL 50 million, adjusted by the Selic.

According to a material fact disclosed by Afya, there is still a contingent portion related to 84 additional medical vacancies subject to approval by the Ministry of Education. If the ministry approves this volume by December 31, 2024, there will be a potential additional payment of BRL 1.25 million per vacancy at UNIT Alagoas, whose value will be adjusted by the IPCA.

As part of the transaction, the UNIT and FITS brands will be licensed for use by Afya during the first year of the transaction. On another front, the group informed that its portfolio of digital solutions, the result of internal initiatives and acquisitions of healthtechs, will be offered free of charge to medical students at UNIT Sergipe and FITS Goiânia, campuses not included in the negotiation.

The acquisition marks the entry of Afya in Alagoas, which becomes the sixth state in the Northeast region with a presence of the group. At the same time, the agreement reinforces the presence of the operation in the Pernambuco market, a state in which the company already operates through FAMEG, in the municipality of Garanhuns.

In total, the business will add 340 authorized places per year in medical courses to the company’s operation, which will have a base of 3,099 vacancies or 22,313 students at maturity. The projection is that the combined net revenue of the two merged assets will be R$ 261 million in 2024.

In the field of medical school acquisitions, this is the eighth acquisition made by Afya since its IPO. This inorganic route began in August 2019, with the purchase of IPEC, and also includes names such as UniRedentor and Unigranrio, the latter closed in August 2021, for R$700 million.

With adjusted net revenue of BRL 1.1 billion in the first half of 2022, up 45.9% year-on-year, Afya is valued at USD 1.3 billion. Its shares opened on the Nasdaq on Thursday up 1.67%. In the year, the papers accumulate a devaluation of more than 7%.

Source: Neofeed