Banco Macro Exits Patagonia Talks a Second Time, Brito Says

  • Macro’s Brito says Banco do Brasil changed terms for the deal
  • Argentine lender was final bidder for Banco Patagonia stake

A Banco Patagonia branch in Buenos Aires, Argentina.

Photographer: Markus Matzel/ullstein bild via Getty Images

Banco do Brasil SA’s attempt to sell Banco Patagonia SA has come to a halt and there’s little chance of resuming the negotiations, according to Jorge Horacio Brito, chairman and majority shareholder of Banco Macro SA, the last remaining bidder.

Brito walked away for the second time from the deal after he said he was asked to travel to Brazil last Thursday to meet with Banco do Brasil’s Chief Executive Officer Paulo Caffarelli to discuss the struggling transaction. But the talks didn’t lead anywhere because Caffarelli “again changed the conditions,” the Argentine billionaire said in an interview on Monday. 

“The deal is closed from our side,” said Brito, who has made three trips to Brazil in his attempt to buy Banco Patagonia since the biggest bank in Latin America hired JPMorgan Chase & Co. in 2016 to advise on a possible sale of its Argentine unit. It was “the last time the train left the station,” he said.

A representative for Banco do Brasil confirmed it had considered non-binding offers for Banco Patagonia and that the negotiations didn’t succeed.

“Patagonia has excellent results and Banco do Brasil has no intention of selling the asset at just any price,” the Brasilia-based bank said in an email to Bloomberg News. The lender reiterated that a share offer remains its main strategy for Banco Patagonia. 

A representative for New York-based JPMorgan declined to comment.

Offer Price

Banco Macro emerged as the final bidder in the race to purchase a majority stake in Banco Patagonia after BBVA Banco Frances SA and Itau Unibanco dropped out earlier in the year. Brito then withdrew from the process in July after he had raised his offer as he tried to make the deal happen at a price that would value the bank at $1.8 billion before reengaging with the Brazilian bank last week.

Brito, who spoke in an interview on his private jet while traveling to the Salta province from Buenos Aires, declined to comment on the price talks.

“The only thing I will say is that I raised my offer to the level the New York investment bank advising them asked me to do,” he said. "I believe they have a problem, an internal issue."

Macro, which raised $766 million in a stock sale in June to finance the acquisition, will now use that cash to grow organically, Brito said. “Buying other banks isn’t the only way to grow,” he said.

The 65-year-old investor is worth about $1.2 billion, according to the Bloomberg Billionaires Index.

Call Option

Brito said Banco do Brasil may have been reluctant to sell Banco Patagonia because the Brazilian bank failed to exercise a call option it held on the shares held by Jorge Stuart Milne, a former chairman of Patagonia. Milne sold the controlling stake of the bank to Banco do Brasil in 2010 and retained a minority portion.

Banco do Brasil could have bought the Milne stake at a lower agreed price under the terms of the call option and sold the combined shareholding to Banco Macro at a higher price. Failure to do so may pose a regulatory problem for the Brazilian bank, Brito said.

“Banco do Brasil’s management won’t be able to give any explanation if some bank controller asks why they did not exercise the option to buy a month ago,” Brito said. “Now this man can sell it for practically double the amount."

Banco do Brasil declined to comment on the exercise of the call option and Milne didn’t immediately reply to calls and emails seeking comment.

— With assistance by Cristiane Lucchesi, and Felipe Marques

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