Redecard Valuation in Line with Itau Offer

The BRL35.88 per share independent valuation of Brazilian credit card processor Redecard is in line with Itau’s BRL35.00 offer made for the company in February, according to analysts. The finding by Rothschild, hired by minority Redecard holders, leaves little room for Itau to increase its offer price, Deutsche Bank says, calling it fair and recommending that minority holders accept. Citi and BR Partners are set to issue a fairness opinion on Rothschild’s valuation report, Deutsche says, which should be performed over the next 2 weeks. This would be followed by a final tender offer from Itau. “Whether or not Itau will be successful in the tender offer we think the above concerns mean that a large pricing power held by the controlling shareholder make it more difficult for minorities to argue for a better price in this negotiation,” Barclays says. Barclays expects the tender to take place and Itau to end up buying most of the Redecard free-float, if not all, even if it is less than the minimum two-thirds required to de-list Redecard. Itau has offered to purchase 336.4m Redecard shares, or 49.985% of the company, for BRL35.00 per share, with the intention to delist it. Itau is advising itself in the process.