Business Context and Reporting Period
This Form 6-K filing by Banco Bradesco S.A. (Bradesco) reports on a corporate action executed in October 2009. The document details the "Protocol and Justification Instrument of the Merger of Shares" between Bradesco and Ibi Participações S.A. (Ibi Participações). The transaction was designed to make Ibi Participações a wholly-owned subsidiary of Bradesco, thereby granting Bradesco indirect control over Ibi Participações' subsidiaries, including Banco Ibi S.A. The Extraordinary Shareholders' Meetings for both entities were scheduled for October 29, 2009, with the operation effective upon Central Bank of Brazil approval.
Key Financial Metrics and Transaction Values
The filing provides specific valuation metrics used to determine the share exchange ratio for the merger, based on balance sheets prepared as of July 31, 2009, and market data from October 2009.
- Bradesco Book Shareholders' Equity (as of 7/31/2009): R$37,956,249,170.49
- Ibi Participações Book Shareholders' Equity (as of 7/31/2009): R$925,151,382.25
- Bradesco Appraised Economic Value: R$91,868,160,462.79 (net of treasury shares as of 10/2/2009)
- Ibi Participações Appraised Economic Value: R$1,368,183,000.00
- Share Valuation for Exchange Ratio:
- Bradesco: R$29.962765280 per share (based on 30-day average intra-day quote)
- Ibi Participações: R$1.480210817 per share
- Exchange Ratio: 0.049401676 fraction of a Bradesco share for each Ibi Participações share.
- Capital Stock Increase: Bradesco's capital stock increased by R$1,368,183,000.00, from R$23,000,000,000.00 to R$24,368,183,000.00.
- New Shares Issued: 45,662,775 new Bradesco shares (22,831,389 common; 22,831,386 preferred).
Material Changes
The primary material change is the structural consolidation of Ibi Participações into Bradesco. This transaction alters Bradesco's capital structure by increasing its authorized capital stock and issuing new shares to Ibi Participações shareholders. The filing does not provide comparative revenue, profit, or cash flow data for the period, as the document focuses exclusively on the terms of the merger rather than operational financial performance.
Outlook, Risks, and Contingencies
Management Commentary and Strategy: The merger is intended to enable Bradesco to directly assume control of Ibi Participações and indirectly control its banking and insurance subsidiaries. Management states the goal is to achieve higher levels of competitiveness and productivity by absorbing expertise in an attractive banking segment and enhancing synergies.
Regulatory Contingencies: The operation is contingent upon approval by the Central Bank of Brazil. Dividends and interest on own capital for the newly issued shares will be effective as of the first business day following this approval.
Shareholder Rights:
- Withdrawal Rights: Shareholders of both companies have the right to withdraw (sell back shares) at book value as of July 31, 2009. The withdrawal price is R$1.000903449 per Ibi Participações share and R$12.379416101 per Bradesco common share.
- Tag-Along Rights: In the event of a public offering arising from the disposal of control, non-controlling common shareholders are entitled to 100% of the price paid to controlling shareholders. Preferred shareholders are entitled to 80% of that price.
Forward-Looking Statements: The filing includes a standard disclaimer that statements regarding future economic circumstances, industry conditions, and company performance are subject to risks and uncertainties, and actual results may differ materially from expectations.
Key Facts for Investor Verification
- Verify the final approval status of the merger by the Central Bank of Brazil.
- Confirm the issuance of 45,662,775 new Bradesco shares and the updated capital stock total of R$24,368,183,000.00.
- Review the specific terms of the withdrawal rights for shareholders who opted out of the merger.
- Monitor the integration of Banco Ibi S.A. and other Ibi Participações subsidiaries into Bradesco's operations.
- Check subsequent filings for the actual financial impact of the merger on Bradesco's consolidated revenue and earnings.