Banco de Credito e Inversiones SA said Dec. 19 that it signed a definitive agreement to fully acquire retail giant Wal-Mart's Chilean financial division for approximately 92.01 billion Chilean pesos (US$148.1 million).
The purchase price for Wal-Mart Chile Servicios Financieros represents about 1.5x book value, according to the Chilean bank, which in September confirmed that it was in deal talks with Wal-Mart Chile.
In conjunction with the deal, which is subject to customary regulatory approvals, Bci will enter into a renewable 10-year commercial agreement with Wal-Mart Chile that includes "success-based" commissions for the retailer.
"The strategic alliance brings together two complementary businesses to enhance and further develop credit solutions and related products for Walmart clients providing at the same time Bci with access to Walmart's customer base," the company said.
Wal-Mart Chile Servicios Financieros currently operates 127 branches and 1.4 million credit cards. It's gross credit card loan portfolio stood at 516.01 billion pesos as of September. With the acquisition, Bci expects its total credit card loan portfolio to top 1.003 trillion pesos on a pro forma basis, giving it an approximately 17.4% market share among banks and a 12.6% market share when retailers are included.
Bci plans to fund the deal with internal funding sources, though it noted that it plans to raise some 85.67 billion pesos in fresh capital in order to maintain a 10% Tier 1 risk-based capital ratio.
The bank expects to see 3.4% EPS accretion from the deal in 2019; it sees EPS accretion of 4.1% and 5.0% in 2020 and 2021, respectively.
Bci expects to close the acquisition during the second half of 2018.
As of Dec. 18, US$1 was equivalent to 621.4 Chilean pesos.