(Recasts to add size of offer, details throughout)
By Guillermo Parra-Bernal
SAO PAULO, Feb 19 (Reuters) - Brazil’s BM&FBovespa SA is offering more cash and stock to buy rival clearinghouse Cetip SA Mercados Organizados, as Latin America’s largest bourse seeks to expand into fixed-income and derivatives registration amid the bleakest outlook for domestic markets in more than a decade.
In a securities filing, BM&FBovespa placed a binding offer of 41 reais per share of Cetip, of which 30.75 reais would be paid in cash and the rest in stock of the São Paulo-based bourse. The offer values Cetip, a clearinghouse and depositary company that also sells auto and mortgage loan liens, at about 10.86 billion reais ($2.8 billion)
Cetip shareholders would earn interest pegged to Brazil’s benchmark interbank rate until conclusion of the deal, the filing said. In a separate filing, the board of Cetip, which is also based in São Paulo, said it would evaluate the terms of the revised offer.
BM&FBovespa had presented a non-binding offer of 39 reais a share in November, which Cetip rejected saying it did not fairly reflect the value of the company’s operations. The companies had engaged in preliminary merger talks right after the first offer, which valued Cetip at about 10 billion reais.
If successful, a purchase would make BM&FBovespa the dominant exchange in Brazil, controlling depositary and clearing activities for all types of financial assets and sourcing investors with benchmark indexes and proprietary market data. stock indexes are the benchmark for global investors.
“Management believes that a combination of talents and strengths will help generate significant benefits for financial and capital markets, clients, shareholders and employees and create a world-class player,” Daniel Sonder, BM&FBoverspa’s chief financial officer, was quoted as saying in the filing.
The negotiations came after years of speculation that BM&FBovespa could pursue an unsolicited takeover of Cetip to grow in registration and custody of fixed-income and credit market instruments - segments in which the bourse has failed to gain market share. Cetip is Latin America’s largest securities clearinghouse.
Cetip fell 0.3 percent on Friday to 38.25 reais, while BM&FBovespa closed almost unchanged at 10.55 reais.
Shares of both Cetip and BM&FBovespa had gained 5 percent and 3.9 percent, respectively, this week, on hopes of an improved offer. Earlier this week, the online edition of O Estado de S. Paulo had reported that a revamped offer for Cetip was imminent, with the bid coming between 41 reais and 42 reais.
$1 = 4.0199 Brazilian reais Reporting by Guillermo Parra-Bernal; Additional reporting by Reese Ewing in São Paulo; Editing by Chris Reese, Bernard Orr