Cencosud Falls on Report Itau Credit Card Deal Scuttled

Cencosud SA (CENCOSUD), Latin America’s third-biggest retailer by sales, declined the most in a month after El Mercurio reported it has withdrawn from a deal to sell control of its credit card unit to Brazil’s Itau Unibanco Holding SA. (ITUB4)

Cencosud retreated 2.5 percent to 1,910 pesos at 12:33 p.m. in Santiago. A close at that level would be the biggest one-day drop since Nov. 11. Chile’s benchmark IPSA Index gained 0.2 percent. Itau sank 1 percent in Sao Paulo as Brazil’s main equity gauge slipped 0.2 percent.

The retailer has decided not to proceed with a plan to sell its in-store credit card operations to Itau, El Mercurio reported today, citing unidentified people familiar with the discussions. The companies said in June that they had reached an agreement for Itau to buy a 51 percent stake in Cencosud’s Chilean and Argentine credit card operations for $307 million. The Brazilian lender had also agreed to pay $1.3 billion for Cencosud’s portfolio of credit card loans.

“The market doesn’t like this because suddenly Cencosud won’t receive the $1.6 billion it had said it would use to pay debt,” Cristina Acle, an analyst at Banchile Inversiones, said in a phone interview from Santiago.

Cencosud ended the discussions after Itau sought to postpone the signing of a final deal as it’s also negotiating a takeover of Chilean lender Corpbanca SA, according to El Mercurio’s report.

An official at Cencosud’s communications office declined to comment on the end of talks when contacted by phone. An official at Itau declined to comment in an e-mailed response to questions.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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