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Controlling shareholders bid to take Brazil payments firm Cielo private for $1.2 billion

Published 02/05/2024, 07:48 PM
Updated 02/05/2024, 08:35 PM
© Reuters. The company logo for Cielo is displayed on a screen on the floor of Brazil's B3 Stock Exchange in Sao Paulo, Brazil, July 25, 2019. Picture taken July 25, 2019. REUTERS/Amanda Perobelli/File Photo

SAO PAULO (Reuters) -Payments company Cielo said on Monday a trio of Brazilian firms including its controlling shareholders had launched a tender offer to take it private in a deal that could be worth up to 5.90 billion reais ($1.18 billion).

Lenders Bradesco and Banco do Brasil, which together hold almost 60% of Cielo, are making the offer together with their shared holding company, Grupo Elopar.

The offer would be at 5.35 reais per share, a 6.4% premium from Monday's closing price, Banco do Brasil and Bradesco said in separate filings.

"The premium to today's close price seems timid and could lead to some back and forth before reaching a final price, but, nonetheless, the stock should trade up on it," Citi analysts led by Gabriel Gusan wrote in a report. The bank has a "buy" rating on the stock.

Cielo has a current market value of around about 13.7 billion reais. The company said the firms had formally informed it of the offer after trading closed on Monday.

The deal, which has been the subject of industry speculation for years, would amount to 5.90 billion reais if the lenders acquire all shares in Cielo they do not own, and would value the entirety of Cielo at about 14.5 billion reais.

Analysts at XP (NASDAQ:XP) Investimentos, who do not offer formal coverage of Cielo, wrote the deal seemed positive for the company because it was aligned with recent moves by lenders Itau Unibanco and Santander (BME:SAN) Brasil to better integrate their payments companies Rede and Getnet, respectively.

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Earlier on Monday, Cielo had posted 480.8 million reais recurring net profit for the fourth quarter, down 2% from a year earlier.

($1 = 4.9854 reais)

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