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Redecard Shares Rise as Profit Beats Analysts’ Estimates

Redecard SA, Brazil’s second-biggest payments processor, rose in Sao Paulo trading after second-quarter profit exceeded analysts’ estimates on cost cuts and higher rental-equipment fees.

Redecard gained 0.9 percent to 33.30 reais today in Sao Paulo trading as Cielo SA, Redecard’s bigger rival, advanced 1 percent to 62.65 reais.

Recurring net income at Barueri-based Redecard climbed 20 percent to 388.1 million reais ($193 million), or 58 centavos a share, from 322.6 million reais, or 48 centavos, a year earlier, the company said yesterday in a statement. That beat the average estimate of 56 centavos by 14 analysts surveyed by Bloomberg.

“Redecard posted a better operating efficiency because of lower expenses and a significant increase in the average equipment-rental revenue of credit- and debit-card terminals,” Nataniel Cezimbra and Carlos Daltozo, analysts at Banco do Brasil SA, wrote in a report.

Chief Executive Officer Claudio Yamaguti, whose company may be bought out by Sao Paulo-based Itau Unibanco Holding SA, pared operating expenses 13 percent from the second quarter of 2011, led by a 28 percent reduction in personnel costs to 46.7 million reais, according to the statement. Average rent on the company’s terminals rose to 70.67 reais in the period, up 39 percent from a year earlier and 5.7 percent from the first quarter.

Total credit- and debit-card volume climbed 6.5 percent to 59.3 billion reais from a year earlier, the company said.

Itau’s Offer

Itau offered 35 reais a share, or 11.8 billion reais, in February to buy the 49 percent stake in Redecard it doesn’t already own. NM Rothschild & Sons Ltd. appraised the offering for minority stockholders, valuing each share at 34.18 reais to 37.59 reais, Redecard said in an April 5 regulatory filing.

Lazard Asset Management LLC, Redecard’s second-biggest shareholder with a stake of about 10 percent as of Feb. 16, asked for a new evaluation, saying Rothschild undervalued the stock. Credit Suisse Group AG conducted a second appraisal and valued the shares last month in line with Itau’s bid.

Itau reaffirmed its plan to buy Redecard after the second appraisal.

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