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Reuters
Brazil’s BM&FBovespa SA is arranging loan financing to fund its 12.9 billion reais ($3.6 billion) takeover of rival Cetip SA Mercados Organizados as both companies agreed to form a giant financial exchange with a presence from Mexico to Chile.
BM&FBovespa Chief Executive Officer Edemir Pinto, who will run the combined entity, declined to elaborate on the loan.
Shares of both firms advanced more than 2 percent on optimism a takeover of Cetip would make BM&FBovespa a dominant bourse in Brazil and the region, controlling depositary and clearing activities for all types of assets and sourcing investors with proprietary market data.
Cetip is Latin America’s largest securities clearinghouse, with a vast over-the-counter, fixed-income derivatives operation.
While BM&FBovespa expects to pay about 75 percent of the proposed amount in cash, a structure protecting shareholders of Cetip from fluctuations in BM&FBovespa’s stock could boost the threshold to 85 percent, executives at both companies said on Monday. Reuters reported last week that Cetip agreed to a takeover after BM&FBovespa improved its bid. Cetip shareholders will own 12 percent of the new company and get two new seats on BM&FBovespa’s enlarged 13-strong board.