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After 2 rejected offers, BM&FBOVESPA and Cetip strike a deal


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Investment Banking Essentials Newsletter April Edition - 2022


Banking Essentials Newsletter April Edition - 2022


Investment Banking Newsletter April 2022

After 2 rejected offers, BM&FBOVESPA and Cetip strike a deal

Confirmingearlier reports,BM&FBOVESPA SA saidApril 8 that it reached a cash-and-stock merger deal with Cetip SA to create a Latin American trading market powerhouse.

Under the terms of the deal, Cetip shareholders will receive30.75 Brazilian reais in cash and 0.8991 of a BM&FBOVESPA share for each Cetip share held. Based on BM&FBOVESPA's April 8 closingprice of 15.90 reais, thedeal values each Cetip share at about 45 reais apiece. The companies noted thatthe cash portion of the deal is subject to adjustment based on any changes in theCDI interbank rate between April 8 and the closing of the deal.

Followingthe transaction, Cetip shareholders will end up owning about 11.8% of BM&FBOVESPA'sequity capital.

In astatement, the companies said that the "combination of talent and strengthswill represent an unparalleled milestone in the development of the Brazilian financialand capital markets, giving rise to a world-class market infrastructure companyof high systemic importance and prepared to compete in an increasingly sophisticatedand challenging global marketplace while enhancing the security, solidity and efficiencyof the Brazilian market."

The dealcomes after two prior failed attempts by BM&FBOVESPA to acquire Cetip. In 2015, BM&FBOVESPA putforward an unsolicited offer that valued Cetip at 39 reais per share, but Cetip'sboard rejected the offer,saying that it undervalued the company's business, assets, market position, andgrowth and profitability prospects.

BM&FBOVESPAcame back in February with a new offervaluing the company at 41 reais per share. And while Cetip again that offer, it did agree to signa confidentiality agreement to continue negotiations for a proposed deal.

As of April 7, US$1 was equivalentto about 3.70 Brazilian reais.