Cencosud SA (CENCOSUD), Latin America’s third-biggest retailer, canceled a deal to sell its credit-card business to Itau Unibanco Holding SA (ITUB4) as the Brazilian bank holds talks to buy a majority stake in Chilean lender Corpbanca SA. (CORPBANC)
Itau had agreed to pay $307 million for 51 percent of Cencosud’s Chilean and Argentine card operations, according to a memorandum of understanding signed in June. Cencosud, which also agreed to sell its card-lending portfolio for $1.3 billion, said in a regulatory filing today that it failed to sign a definitive deal with Itau before a Dec. 21 deadline.
Itau’s negotiations to buy Corpbanca, the lender controlled by billionaire Alvaro Saieh, helped derail its deal with Santiago-based Cencosud, said Andre Riva Gargiulo, an analyst at brokerage Grupo Bursatil Mexicano SA in Sao Paulo. Corpbanca owns 51 percent of SMU Corp SA, which manages a credit-card portfolio for supermarket operator SMU SA.
“If Itau maintained the talks with Cencosud, it would have a conflict of interest,” Gargiulo said in a phone interview. “If Itau wants to grow in Chile, and it said it wants to, the acquisition of Corpbanca would be much better for Itau than the purchase of Cencosud.”
Itau made every effort to complete the deal, the Sao Paulo-based bank said today in a filing. A Cencosud press official, who asked not to be identified in keeping with company policy, declined to comment on whether Itau’s negotiations with Corpbanca scuttled the deal. An official at Santiago-based Corpbanca didn’t immediately return e-mail and phone messages seeking comment.
Cencosud fell 2.5 percent to 1,905 pesos at 2:18 p.m. in Santiago. The shares have dropped 26 percent this year.
“This will have a strong negative impact on Cencosud’s stock price, as it will limit the company’s growth in the short term,” Cristian Jadue and Reinaldo Santana, analysts at Banco Santander SA, wrote today in a note to clients.
The retailer would have used the funds from a deal with Itau to pay down debt, the analysts said.
Cencosud plans to create a new company that will run the credit-card operations as a unit of Banco Paris, its bank subsidiary, the retailer said today in an e-mailed statement.