Redecard SA (RDCD3), Brazil’s second-biggest card-payment processor, rose above the price Itau Unibanco Holding SA (ITUB4) offered minority shareholders yesterday on speculation Itau will raise its bid.
Shares (RDCD3) of Redecard gained 2.8 percent to 36.40 reais, the highest since November 2007, at the close in Sao Paulo. Itau, which controls half of Redecard, offered yesterday as much as 35 reais a share for the 50 percent it doesn’t own, a bid equal to 11.8 billion reais ($6.9 billion). The benchmark Bovespa (IBOV) index fell 0.1 percent.
Itau may raise its offer to about 42.50 reais per share, the midway point between its initial bid and the 50 reais price that Redecard is worth to Itau, according to analysts at Banco Santander SA. Paulo Ribeiro, a New York-based analyst at HSBC Securities, said Redecard will raise its offer. He declined to state a price.
“The 35 reais per share, even though they say it’s the maximum price they would pay, it’s for me the opening salvo in this negotiation,” Ribeiro said in a telephone interview. He maintained his 39 reais price target in a research note today. “There is more value there that Itau has not fully recognized in the offer,” he said.
Itau Chief Executive Officer Roberto Setubal said the company’s offer for Redecard is “fair” during a conference call with analysts today. A company official didn’t return an e- mailed request seeking further comment.
Santander analysts Henrique Navarro, Renato Schuetz and Boris Molina calculated that Redecard may be worth 50 reais to Itau based on cost cutting from the merger, gains from a potential Redecard partnership with Hipercard and tax savings for Itau. A Redecard deal with Hipercard would boost Ribeiro’s target price to 41 reais, he wrote in his note.
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