The Superintendence of Brazilian regulator CADE has issued a recommendation to its general council to withhold approval for the proposed merger between the country’s biggest education companies, Kroton and Estació.
The merger, estimated at over $1.7 billion US, has been approved by both firms’ shareholders, with the decision still being reviewed by the courts. However, CADE’s negative would represent a severe blow to the companies’ plans.
CADE’s Superintendence has determined that a merger between the two companies would lead to excessive concentration, bordering on monopoly power in several local markets, with negative effects for the country as a whole. Their analysis, they say, revealed several redundancies in their post-graduate offerings, as well as a strong likelihood of negatively impacting the cost of tuition and registration, reducing incentives for innovation and diversification.
Kroton and Estació will prepare a new proposal of compromises to be presented to CADE’s investigators. The offer is expected to include the sale of several of the companies’ distance-learning services, in hopes of relieving the agency’s concerns.
Full Content: Diario de Goias
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