(Reuters) February 7, 2012 – Itau Unibanco (ITUB4.SA) (ITUB.N), Brazil’s largest private-sector lender, plans to spend as much as 11.77 billion reais ($6.81 billion) to buy out Redecard (RDCD3.SA), protecting the card payment processor’s position in an increasingly competitive industry.
Itau Unibanco plans to buy the 49.99 percent of Redecard (RDCD3.SA) it does not already own in a first step taking the company private, according to a securities filing on Tuesday. The lender will offer 35 reais for each of the 336.39 million Redecard shares that currently trade on the Sao Paulo Stock Exchange.
The offer represents a 9.9 percent premium over Redecard’s closing price of 31.84 reais on Monday. The stock jumped as much as 9.9 percent in early trading in the Sao Paulo Stock Exchange, the biggest intraday gain since at least October 2009.
Redecard shares have surged 84 percent in the past 12 months, mainly after a yearlong restructuring plan helped bolster revenue, cut costs and stem market share losses to larger rival Cielo (CIEL3.SA) and smaller competitors.
The buyout would probably help Redecard face growing competition in the $400 billion-a-year card payment processing industry. Some analysts have voiced concerns that the entry of more competitors could drive fees down and eat away at market share. Cielo and Redecard together control more than 80 percent of the market.
Cielo shares jumped 8 percent to 35.72 reais, the seventh daily gain in eight sessions. The company is scheduled to release fourth-quarter earnings on Wednesday.
Itau Unibanco’s announcement came less than a week after Redecard posted a bigger-than-expected 31 percent jump in fourth-quarter profit, to 456.94 million reais.
Nine analysts polled by Reuters had forecast 402.2 million reais, on average.
Redecard Chief Executive Officer Claudio Yamaguti, who has been at the helm of the company for the past year, said last week that it would more than double capital spending to 500 million reais this year to win more customers and improve operational efficiency.
(Reporting by Guillermo Parra-Bernal; Editing by Maureen Bavdek, John Wallace and Lisa Von Ahn)