UPDATE 2-Brazil's BM&FBovespa seeks loan to fund cash part of $3.6 bln Cetip deal

lunes 11 de abril de 2016 11:45 GYT

(Adds details throughout)

SAO PAULO, April 11 (Reuters) - Brazilian bourse BM&FBovespa SA is arranging loan financing to fund part of the 12.9 billion reais ($3.6 billion) that rival Cetip SA Mercados Organizados could cost, a sign that the cash portion of the deal may increase.

BM&FBovespa Chief Executive Officer Edemir Pinto said at a Monday news conference to announce the deal, which was reached on Friday after markets closed, that about 75 percent of the proposed amount could be paid in cash. However, that could rise to 85 percent due to a provision to protect Cetip shareholders from fluctuations in BM&FBovespa's stock price.

Pinto, who would run the combined entity, declined to elaborate on terms of the loan financing deal. BM&FBovespa, Latin America's largest financial bourse, is also using $1.2 billion in proceeds from the sale of a stake in longtime partner CME Group Inc to fund the Cetip takeover.

Cetip is Latin America's No. 1 securities clearinghouse and has a vast over-the-counter derivatives operation. BM&FBovespa is also undertaking expansion in Mexico, Chile and Colombia, where it recently bought or was negotiating the purchase of minority stakes in those countries' respective exchange operators.

Shares of both companies rose 2 percent on optimism that the takeover would boost BM&FBovespa's dominant regional position, controlling depositary and clearing activities for all types of assets and sourcing investors with proprietary data.

Still, analysts such as HSBC Securities Inc's Carlos Gómez-López expect tough regulatory scrutiny because the deal would remove competition for BM&FBovespa in equity trading and derivatives. Americas Trading System Brasil, a BM&FBovespa rival in the equity segment, will request antitrust watchdog Cade to investigate whether the deal infringes on competition rules.

Executives at the news conference said both companies expected authorities and shareholders to approve the deal in due time.