Milbank LLP recently advised Ser Educacional S.A. (“Ser”), one of the largest private education groups in Brazil, on its $725 million cash and stock bid to acquire the Brazilian assets of NYSE-listed global education company Laureate Education Inc., and TOTVS S.A. (“Totvs”), the leading software company in Brazil, on its $1.1 billion proposed business combination with Linx S.A. (“Linx”), a NYSE-listed Brazilian software company.
These two high-profile, contested transactions were among the largest and most complex public M&A processes that took place in Brazil during 2020 and evidenced the sophistication and dynamism of the Brazilian M&A market.
One of the drivers of such sophistication and dynamism has been the growing number of Brazilian companies that have evolved from privately controlled listed companies into true public companies with a dispersed shareholder base. As a result of this shift, certain issues and concerns most relevant to public M&A transactions have been foregrounded, including the fiduciary duties of the target’s board of directors, the role of special committees of independent directors, the mechanics around shareholders’ meetings, lock-up and voting support agreements, the rights of minority shareholders, and the use of “go-shop,” “no-shop” and breakup fee provisions, among others.
Another trend evidenced by these and other transactions has been the increasing use of stock as transaction currency, which has led to the registration of the stock of Brazilian companies with the U.S. Securities and Exchange Commission and their listing on US stock exchanges.
These high-profile, contested transactions follow Magazine Luiza’s 2019 acquisition of Netshoes, a public M&A transaction involving multiple post-signing topping bids in which Milbank represented the winning bidder, Magazine Luiza.
Milbank has developed a leading practice for this type of transaction involving Brazilian companies, and expects to see more of this type of transaction in the coming years as the shareholder base of Brazilian public companies becomes wider and more dispersed.
The Milbank team advising Ser and Totvs on their respective transactions was led by Global Capital Markets partner Tobias Stirnberg and Global Corporate partners Scott W. Golenbock and Francisco R. Nuñez, and included associates Amy Kletsel, Alexia Raad and Nam Phan and international attorney Guilherme Maranhão.
