BdB Nabs Voto Stake

Banco do Brasil has agreed to buy a near 50% stake in Banco Votorantim for BRL4.2bn, significantly less than originally expected. The combined entity will have BRL553.3bn in assets, BRL275.7bn in deposits and a credit portfolio of BRL232.8bn, the acquirer says. The state-controlled bank is purchasing 33bn Votorantim voting shares for BRL3bn and taking 7.4bn new preferred shares for BRL1.2bn, in a deal that had been rumored since last fall. BdB had been rumored last year to be pursuing a 49% stake in Voto for an estimated BRL6.5bn. BdB says Voto gives it access to the vehicle financing market, as well as increased corporate banking. Voto meanwhile gets access to a government-backed funding and distribution structure. BdB was advised by UBS and Votorantim by the Boston Consulting Group. Finance minister Guido Mantega says the acquisition helps to strengthen Brazil’s financial system amid crisis, according to wire reports. BdB lost its position as LatAm’s biggest financial group after Itau agreed to a takeover of Unibanco in November. Also in November, BdB bought a majority stake in Sao Paulo state-owned lender Nossa Caixa. M&A specialists anticipate further consolidation in the Brazilian banking sector including state-owned entities buying smaller private sector banks, larger banks both private and state-owned acquiring credit portfolios of middle market firms, and foreign players seeking to increase their share through acquisitions. The big question mark hangs over how Bradesco will handle the sudden surge by its three biggest competitors, which demotes it to third from first place. It was rumored to have bid for Voto, but executives away from the deal said Bradesco’s desire to buy a controlling stake found little support from the target’s controlling shareholders.