Itau Wins Corpbanca Shareholder Vote for $1.8 Billion Deal

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Itau Unibanco Holding SA’s $1.8 billion offer to take control of Chile’s Corpbanca SA won approval from shareholders of the Santiago-based bank in one of the final steps toward creating Chile’s fourth-largest lender.

The vote was 88.4 percent in favor, Corpbanca said Friday, allowing the combination of the Chilean company controlled by billionaire Alvaro Saieh with the local unit of Sao Paulo-based Itau.

“The deal will give us a partner with a bigger presence in Latin America,” Corpbanca Chief Executive Officer Fernando Massu told shareholders before the vote. “It also helps solidify the platform that Corpbanca has been building in Chile and Colombia.”

Itau is expanding outside Brazil to mitigate the effects of its home country’s economic downturn. In addition to the Corpbanca acquisition, the firm’s biggest takeover outside Brazil, Itau has developed retail units in Chile, Uruguay, Argentina and Paraguay. It’s also increasing its wholesale business in Colombia and Mexico.

“The deal broadens Itau’s reach outside Brazil at a time when the nation is the worst emerging market,” Henrique Kleine, head equity analyst at brokerage Magliano SA in Sao Paulo, said in a telephone interview Thursday. Kleine said the acquisition would be “healthy” for Itau, though a full analysis is difficult because some of Corpbanca’s data still hasn’t been released publicly.

Bigger ‘Footprint’

The approval is “a decisive step” toward creating a regional banking leader, Itau CEO Roberto Setubal said in an e-mailed statement. “This transaction is consistent with Itau Unibanco’s strategy to significantly expand its footprint in Latin America.”

The combined bank will have $48.5 billion in assets, $33 billion in loans and more than 10,000 employees, Massu said. It will have a market share of close to 13 percent in Chile and 6.3 percent in Colombia, with annual profit of about $516 million per year, he said.

“We’ll be in a good position to become the third-largest lender” in Chile based on assets, Massu told reporters after the meeting. The three biggest private lenders are Banco Santander Chile, Banco de Chile and Banco de Credito e Inversiones.

The company will also have a strong capital base to continue expanding its loan portfolio, Massu said.

Profit Drop

The plan includes a $400 million extraordinary dividend to compensate Corpbanca shareholders for a drop in profitability at Itau Chile since the merger agreement was first announced in January 2014.

Corpbanca’s 2014 profit increased 46 percent from a year earlier, while Itau Chile’s net income fell 2.3 percent, data from the local bank regulator show. Corpbanca’s shares increased 17 percent since the deal was announced through Thursday.

As part of negotiations before the vote, Corpbanca and Itau Chile also agreed to postpone the deadline to complete the deal until next year, with each lender paying half of their 2015 profit as dividends to current shareholders.

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