UBS AG announced today that it will acquire the Brazilian financial services firm, Banco Pactual S.A, for an estimated US$2.5 billion.
The deal involves an upfront payment of US$1 billion, and a further payment of up to US$1.6 billion in five years, subject to certain performance conditions. In addition, UBS will establish a retention pool of up to US$500 million in UBS shares for Pactual and UBS employees payable beginning on the fifth anniversary of closing. The present value of the entire transaction, including the retention pool, amounts to US$2.5 billion. The transaction is expected to close in the third quarter 2006, subject to regulatory approval.
The businesses of Pactual will be integrated into the Investment Banking, Wealth Management and Asset Management businesses of UBS. Pactual Asset Management has US$18.6 billion under management as of March 31. Its Wealth Management business manages a further US$4.6 billion for high net worth individuals. The combined entity will be the cornerstone of UBS’s operations in Brazil and a key element of the bank’s strategy to expand in emerging markets.
The transaction will add significant scale to UBS’s business in Brazil making UBS one of the top providers of investment banking, asset management and wealth management services in the country. Peter Wuffli, CEO of UBS said, “Brazil has one of the world’s fastest growing financial markets and therefore is a key focus area for UBS. This acquisition represents an efficient combination between the leading independent investment bank in Brazil and UBS, one of the world’s most powerful financial services firms. The combined entity will provide an unrivaled platform for the business to grow in Brazil and throughout Latin America.”
“This deal is a cornerstone in our strategy to increase penetration in emerging markets within fixed income and equities. In 2005 the investment banking fee pool in Brazil was one of the largest among emerging economies and made up approximately 40% of the investment bank fee pool in Latin America,” commented Huw Jenkins, CEO of UBS Investment Bank. “Pactual’s market strength will complement UBS’s existing position in Latin America.”
Andre Esteves, managing partner of Pactual said, “We are confident that the combination of a first class global bank with our leading position in Brazil’s financial industry will create an even more powerful investment bank in the Latin America region. Our clients will benefit from a significant enhancement in our product line and the overall quality of our services, and we will be a market leader in all areas.”
UBS to buy Banco Pactual
Swiss firm enters Brazil’s fast-growing financial services market
- By: James Langton
- May 9, 2006 May 9, 2006
- 09:06