Afya Limited (NASDAQ: AFYA) revealed that it has inked buying deal for the acquisition of 100% of the total share capital of Universidade do Grande Rio Professor José de Souza Herdy (UNIGRANRIO). The firm has signed the deal through its fully-owned unit Afya Participações S.A.,. The total buying price is R$700.0 million. It includes the assumption of projected Net Debt of R$72.4 million which will be amended at the execution date.
Furthermore, the equity value will be paid 60% in cash on the deal execution date and 40% in four equal yearly installments, adjusted by the CDI rate. The firm is anticipated an EV/EBITDA of 4.1x at maturity and post synergies. The buying will add the 308 medical school seats to Afya. It will be boosting Afya’s total medical school seats to 2,611. This translates to 18,799 medical students at maturity, signifying a 9% CAGR from 2020 to 2026.
In addition to this, UNIGRANRIO is a post-secondary education institution with government approval to provide on-campus, undergraduate medical, and health-related courses in the state of Rio de Janeiro. It has the best academic quality among for profit universities in the state.
The reported Net Revenue for 2020 stood at R$ 263.1 million of which 49% comes from medical courses and 68% from all health-related courses. The 2023 estimated Net Revenue for UNIGRANRIO is R$ 343.2 million at full maturity, with medical courses signifying 71% of this amount and 85% considering all health-related courses.
There are 82 extra seats still pending authorization. If authorized by the Ministry of Education, will result in a possible additional payment structured as follow. If the authorization is awarded in the first year after the purchase, R$ 1.1 million per seat. If the authorization is granted in the second year after the buying, R$ 1.0 million per seat. If the authorization is awarded between the third and fourth year after the buying, R$ 0.9 million per seat.