On Wednesday, September 23, 2026, YDUQS Participações S.A. (YDUQ3) reported that it entered into an Association Agreement with Afya Limited for a business combination, under which Afya will be merged into YDUQS. On the date the transaction becomes effective, Afya will be extinguished, YDUQS will succeed Afya in all of its assets, rights and obligations, and Afya shareholders will receive new common shares issued by YDUQS, in accordance with the agreed exchange ratio.
Under the agreement, each Class A or Class B common share of Afya will entitle its holder to receive 6.408347 YDUQS common shares. After the implementation of the transaction based on this exchange ratio, the current shareholders of Afya and YDUQS will hold, respectively, 69.0% and 31.0% of the share capital of the combined company, on a fully diluted basis, immediately after closing. The exchange ratio was defined based on the financial position of the companies as of June 30, 2026 and will not be adjusted for changes in net debt, working capital, EBITDA (earnings before interest, taxes, depreciation and amortization), results, profitability outlook or securities prices up to closing.
The agreement adopts a locked box mechanism and sets out permitted distributions from June 30, 2026. YDUQS may declare and pay to its shareholders distributions in an amount equal to the greater of R$ 750,000,000.00 and the adjusted net cash flow to shareholders generated in the period, provided that, as a condition to closing, YDUQS’s net indebtedness does not exceed by more than R$ 750,000,000.00 the net indebtedness on that same date. Fractions of YDUQS shares will be pooled and sold on the stock exchange, with the net proceeds passed on proportionally to the holders, according to a procedure to be disclosed.
The completion of the transaction is expected to occur by March 31, 2028, subject to the extensions provided for in the agreement and the fulfillment of customary conditions precedent, such as final and unappealable approval by CADE, approval by shareholders at YDUQS and Afya general meetings, absence of legal impediment, absence of a material adverse effect, and obtaining third-party and creditor consents. Failure to comply with obligations regarding the calling of meetings, exclusivity or recommendation, or the approval/completion of a competing transaction before the meetings, may trigger a break-up fee of R$ 325,000,000.00; after approval by the meetings, failure to meet the conditions or refusal to complete the transaction may result in a fee of R$ 650,000,000.00, in the circumstances detailed in the agreement.
YDUQS highlights that the business combination aims to integrate Afya’s medical education ecosystem with YDUQS’s diversified large-scale higher education model, expanding the scale and geographic reach of the platform. According to the material fact, integrating Afya’s 3,768 authorized annual medical seats with YDUQS’s 2,120 seats, as well as adding YDUQS’s 11.4 thousand undergraduate medical students to Afya’s 26.4 thousand, will result in approximately 38 thousand medical students, with estimated synergies whose net present value (NPV) is projected between R$ 2 billion and R$ 2.2 billion, with 80% of these efficiencies expected in the first three years after closing, already net of the estimated effects of Pillar 2 and integration costs.
The agreement also provides for adjustments to the governance of the combined company, to be decided at a shareholders’ meeting that will amend the bylaws and elect a new board of directors after closing. Major shareholders, such as Advent, Família Zaher, Bertelsmann and Família Esteves, have entered into voting commitments to support the approval of the transaction and have undertaken 180-day lock-up obligations on shares of the combined company. YDUQS’s management will call an extraordinary general meeting after the supporting documents have been finalized and notes that the transaction will not give rise to withdrawal rights for shareholders, keeping the market informed of further developments.
