Business Context and Reporting Period
This Form 6-K filing by Banco Bradesco S.A. (Bradesco) covers the month of May 2011, specifically dated May 23, 2011. The report details a strategic acquisition where Bradesco obtained control of Banco do Estado do Rio de Janeiro S.A. (BERJ) from the Government of the State of Rio de Janeiro via an auction held on May 20, 2011.
Key Financial Metrics and Transaction Details
The transaction involves the acquisition of 96.23% of BERJ's capital stock (96.99% of common shares and 95.21% of preferred shares) for a total price of R$1.025 billion. Additionally, Bradesco acquired the right to provide government services (payroll, tax collection) for a separate fee of R$748.7 million.
| Metric | Value (R$ million) |
|---|---|
| Price of BERJ Shares | 1,025 |
| Price of Payroll Services | 748.7 |
| BERJ Total Assets (Dec 31, 2010) | 672 |
| BERJ Shareholders' Equity (Dec 31, 2010) | 230 |
| BERJ Unrecognized Tax Credits | 1,375 |
Payment terms include 20% of the share price and 100% of the payroll price within 5 days of regulatory approval, with the remaining 80% of the share price due within 5 days of tax credit approval. All amounts are subject to restatement based on the Selic rate.
Material Changes and Strategic Impact
The acquisition represents a material expansion of Bradesco's footprint in the state of Rio de Janeiro. Key operational changes include:
- Access to hundreds of thousands of new customers.
- Exclusive rights to manage payroll for 440,000 state employees (active and inactive) and 4,300 active suppliers from January 2012 to December 2014.
- Responsibility for the collection of state taxes, with an annual volume of R$23 billion.
- Strategic positioning to capitalize on investments related to the pre-salt oil layer, the 2014 World Cup, and the 2016 Rio Olympics.
Guidance, Risks, and Contingencies
Upon completion of the share purchase, Bradesco is obligated to hold a public offering for minority shareholders pursuant to Brazilian law (Article 254-A of Law # 6,404/76 and CVM Rule # 361/02). The filing includes standard forward-looking statements regarding future economic circumstances, noting that actual results may differ materially from expectations due to risks such as general economic conditions and regulatory approvals.
Investor Verification Checklist
- Confirmation of Brazilian Central Bank approval for the transfer of BERJ's shareholding control.
- Verification of the existence and realizability of BERJ's R$1.375 billion in unrecognized tax credits, which triggers the final 80% payment.
- Timeline for the mandatory public offering for BERJ minority shareholders.
- Impact of the Selic rate on the final transaction cost prior to payment dates.