Itau Nabs Remaining Stake in Redecard

Brazil’s largest private bank, Itau Unibanco, has made a bid to acquire the stake in card payment firm Redecard that it doesn’t already own for BRL11.77bn ($6.85bn). Itau is offering to purchase 336.4m Redecard shares, or 49.985% of the company, in exchange for BRL35 per share, the company notes in a filing to Brazilian regulators. The acquisition would involve the delisting of Redecard from the Novo Mercado. A Redecard spokeswoman redirected inquiries to Itau. Officials at Itau in turn point out that Itau itself acted as advisor and intermediary in the tender offer, but they declined to offer additional valuation details. The deal offers some promising prospects for Itau in terms of additional businesses that the bank could generate through the Redecard network, says Barclays Capital in a recent note. By investing BRL12bn in exchange for BRL750m in additional profits, Itau’s returns on the Redecard acquisition may be less than investments returning the Selic rate of between 9%-10%, the shop notes. But the purchase of the remaining 50% stake has added value as it is also seen as part of Itau’s strategy to compete with its peers for business in the small and medium sized enterprises category.