Itau Buys $5.17 Billion Redecard Shares in Tender Offer

Itau Unibanco Holding SA (ITUB4), Latin America’s biggest bank by market value, purchased 299 million shares of Redecard SA for 10.5 billion reais ($5.17 billion) as it completed its plan to take the credit-card processor private.

Redecard will stop trading on the BM&FBovespa as a result of the tender offer by Sao Paulo-based Itau, according to a statement from the exchange.

Itau was Redecard’s largest shareholder, with a 50 percent stake, when it offered in February to buy the rest of the company and delist it. The transaction leaves Cielo SA (CIEL3) as Brazil’s only publicly traded card-processing company. The two companies are facing stronger competition after a Brazil central-bank ruling in 2010 ended their exclusive right to process certain transactions.

Itau “will absorb Redecard, and that will create synergies and they will be able to cut costs,” said Pedro Galdi, chief strategist at brokerage SLW Corretora in Sao Paulo. “It was a long process, like a soap opera, but now Itau has reached its goal.”

The bank paid 35 reais per share, or about 9 percent more than the stock price at the time the offer was announced. Redecard shares gained 1 percent to $35 at 5:09 p.m. in Sao Paulo. They reached a five-month high last week as the looming deadline for Itau to purchase all outstanding shares prompted investors to buy the card-payment processor’s stock.

Itau needed to buy at least two-thirds of Redecard’s shares to delist the company, according to an Aug. 23 prospectus.

Lazard’s Challenge

Lazard Asset Management LLC, which owned about 10 percent of Redecard, (RDCD3) asked in April for a new appraisal of Itau’s bid, saying it undervalued the company. Credit Suisse Group AG was hired, and said in June that Itau’s offer was in line with its evaluation.

Redecard was created as a spinoff of Credicard in 1996 by Citigroup Inc., Banco Itau Holding Financeira SA and Uniao de Bancos Brasileiros SA, known as Unibanco, to process credit-card payments and merchant-acquiring businesses, according to its website. Barueri, Brazil-based Redecard raised 4.07 billion reais in an initial public offering in July 2007.

To contact the reporter on this story: Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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