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Material Fact

Recife, May 19, 2014 - SER EDUCACIONAL S.A. ("Company" or "Ser Educacional"). pursuant to Article 157, paragraph 4 of Law 6404 of December 15, 1976, as amended ("Corporation Law"), and CVM Instruction 358 of January 3, 2002, as amended, hereby announces that, on this date, in continuation of the Material Fact disclosed on December 23, 2013, it executed a Share Purchase Agreement ("Agreement") through which its subsidiary ICES - Instituto Campinense de Ensino Superior Ltda. ("ICES") agreed: (a) to acquire 100% of the stock of (i) União de Ensino Superior do Pará - UNESPA, the controlling institution of Universidade da Amazônia - UNAMA, headquartered in Belém-PA; and (ii) Instituto Santareno de Educação Superior - ISES, the controlling institution of Faculdades Integradas Tapajós - FIT, headquartered in Santarém-PA; and (b) receive rights in (i) Associação de Educação Superior do Médio Amazonas - AESMA; and (ii) Fundação Instituto para Desenvolvimento da Amazônia - FIDESA ("Acquisition").

About UNAMA and FIT

UNAMA and FIT are traditional institutions, recognized for their academic rigor, the high quality of their courses and their highly qualified faculty and administrative staff. Currently, they have around 12.2 thousand students, 11.7 thousand of whom undergraduates, enrolled in more than 30 different courses offered in four campuses in the metropolitan region of Belém and Ananindeua, and FIT’s campus in Santarém. Approximately 11% of the student base make use of the FIES, indicating potential growth when compared to the 44% of Ser Educacional’s base. In 2013, the acquired institutions recorded net revenue of R$109.6 million and EBITDA of R$11.4 million, equivalent to 10.4% of net revenue.

From the operational and academic point of view, UNAMA and FIT have reported consistent results. In the most recent ENADE (National Student Performance Exam), UNAMA and FIT received an IGC (General Course Index) rating of 3. In addition, UNAMA’s Law and Psychology courses received a CPC (Preliminary Course Concept) rating of 4 and all its other courses, a rating of 3, underlining the institution’s academic quality.

Ser Educacional after the Acquisition

After the acquisition, Ser Educacional will have a consolidated base of around 125.7 thousand students, 96.6 thousand of whom undergraduate students, 8.7 thousand graduate students, 19.7 thousand vocational students and 0.7 thousand distance-learning students (base of March 2014), enrolled in 29 units in 20 cities in 11 states, with pro-forma net revenue of R$566.3 million and adjusted pro-forma EBITDA of R$165.8 million in 2013.

Additionally, Ser Educacional will do everything possible to ensure that the merger benefits all UNAMA and FIT’s students and faculty. These benefits include new growth opportunities for the administrative staff, the integration and the exchange of experience among professors, and the sharing of each institutions’ best practices, always in the pursuit of constant improvements in course quality and student service.

Structure of the Operation

The Acquisition is subject to the usual conditions attached to such transactions and will be implemented and finalized on the date on which all these conditions have been complied with ("Closure Date").

ICES will pay R$151.2 million for the acquisition as follows: (i) R$24 million as an advance; and (ii) the remainder on the Closure Date, net of amounts retained to guarantee (a) any eventual negative price variation resulting from the price adjustment mentioned below and (b) contingencies. The price adjustment will be determined based on the net debt of the acquired entities, to be verified by their balance sheets on the Closure Date.

Among the conditions for the implementation of the Acquisition is the conclusion of the restructuring of the entities in order to separate their properties. As a result of the separation, besides the Acquisition, all the operational properties currently used by UNAMA and FIT will be subject to long-term leasing operations.

The transaction’s legal advisors were Pinheiro Neto Advogados Associados (for SER) and Odair Z Afonso Advogados (for UNAMA).

Finally, Ser Educacional will keep the market informed of any subsequent material facts as well as any further developments regarding the matters dealt with herein. The Investor Relations area is available to provide any further information needed.


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IR Contact:

Natasha Nakagawa
Investor Relations Officer
Phone.: +55 (81) 3413 4615
E-mail: ri@sereducacional.com
Website: www.sereducacional.com/ir