Bovespa, BM&F Kick Off Merger Talks (2)

Brazil’s two main exchanges, the Bovespa and the BM&F, are officially in talks to merge. The two entities made a joint announcement saying that for 60 days, they will be in exclusive discussions to combine their operations. The move was expected, and the Bovespa’s Mifano went as far as telling LatinFinance earlier this year that combining the two platforms would make sense and talks would eventually take place. The talks are being held now because a higher concentration of the exchanges’ shares in fewer hands makes it easier to approve a deal, according to Itau. The lockup period for the Bovespa’s stock expires April 22, while the BM&F’s ends on May 30. Currently, the Bovespa has a 41% free float with another 24% to be released on the expiration date. The BM&F’s free float is 33% with 20% more to come on May 30, says Itau. For tax purposes, it would make more sense if the BM&F acquired the Bovespa, says the shop, pointing to the higher amount of goodwill that could go untaxed if that were to be the case.