EFG International AG has agreed to pay 1.33 billion Swiss francs ($1.71 billion) for Grupo BTG Pactual SA's Swiss private-banking unit BSI Ltd in a deal that could catapult it into the nation's top-five money managers for the wealthy.
The acquisition, which comes five months after Brazil-based BTG Pactual sealed a deal to buy BSI for 1.25 billion francs, will be paid for in cash and stock. Under terms of the deal, EFG will incorporate BSI, making BTG Pactual the No. 2 partner in the combined firm after Greece's Latsis family.
Prior to the BSI deal, EFG had been the 12th-largest player in a market where consolidation has gained traction as smaller banks struggled with tougher oversight and an erosion of Switzerland's secrecy laws. For BTG Pactual, the sale brings in much-needed cash after the November arrest of founder André Esteves triggered massive client money outflows.
Reuters reported last Friday, citing sources, that BSI could be valued at 1.6 billion francs, giving BTG Pactual up to 30 percent of the combined entity. BTG Pactual and EFG had been in exclusive negotiations over BSI for about a month.
Once the transaction is concluded, EFG will become Switzerland's fifth-biggest private bank behind UBS AG, Credit Suisse Group AG, Julius Baer Gruppe AG and Banque Pictet & Cie SA, with operations spanning Europe, the Americas and Asia.
"It gives us the next plateau," EFG Chief Executive Joachim Straehle told reporters in Zurich.
In a statement, BTG Pactual said the final price for the deal could range between 1.5 billion and 1.6 billion francs, when taking into account BSI's profits until the deal is closed. The São Paulo-based bank will have a stake of 20 to 30 percent in the new company, only to trail the Latsis' estimated 35 percent, when the deal closes.
EFG plans to fund the deal by raising 500 million francs in equity and 250 million in additional Tier 1 capital instruments. The prospect of a new share issue weighed on EFG, whose shares fell 9.1 percent to 6.09 francs.
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The acquisition, which comes five months after Brazil-based BTG Pactual sealed a deal to buy BSI for 1.25 billion francs, will be paid for in cash and stock. Under terms of the deal, EFG will incorporate BSI, making BTG Pactual the No. 2 partner in the combined firm after Greece's Latsis family.
Prior to the BSI deal, EFG had been the 12th-largest player in a market where consolidation has gained traction as smaller banks struggled with tougher oversight and an erosion of Switzerland's secrecy laws. For BTG Pactual, the sale brings in much-needed cash after the November arrest of founder André Esteves triggered massive client money outflows.
Reuters reported last Friday, citing sources, that BSI could be valued at 1.6 billion francs, giving BTG Pactual up to 30 percent of the combined entity. BTG Pactual and EFG had been in exclusive negotiations over BSI for about a month.
Once the transaction is concluded, EFG will become Switzerland's fifth-biggest private bank behind UBS AG, Credit Suisse Group AG, Julius Baer Gruppe AG and Banque Pictet & Cie SA, with operations spanning Europe, the Americas and Asia.
"It gives us the next plateau," EFG Chief Executive Joachim Straehle told reporters in Zurich.
In a statement, BTG Pactual said the final price for the deal could range between 1.5 billion and 1.6 billion francs, when taking into account BSI's profits until the deal is closed. The São Paulo-based bank will have a stake of 20 to 30 percent in the new company, only to trail the Latsis' estimated 35 percent, when the deal closes.
EFG plans to fund the deal by raising 500 million francs in equity and 250 million in additional Tier 1 capital instruments. The prospect of a new share issue weighed on EFG, whose shares fell 9.1 percent to 6.09 francs.
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