PagSeguro Pares Slump After Denying $3 Billion Takeover Report

(Bloomberg) -- Brazilian payment processor PagSeguro Digital Ltd. pared losses after denying reports that it was negotiating the purchase of lender Banco BV.

PagSeguro “does not intend to acquire Banco BV and there are no related signed agreements to do so,” the firm said in a filing. Shares of the company, which is controlled by Brazilian billionaire Luiz Frias, trimmed their decline after sinking as much as 19% in New York.

Earlier Thursday, local news website Brazil Journal reported PagSeguro was in final talks to buy Banco BV for 16 billion reais ($3 billion), citing anonymous sources. The stock slumped, with analysts, including Bradesco BBI’s Otavio Tanganelli, wondering how the two businesses would fit together and calling the reported price tag expensive.

While PagSeguro has made a business out of selling payments technology to small and micro merchants, with a recent venture into digital banking catering to the same clientele, Banco BV has a different focus. The bank specializes in vehicle financing, particularly used cars, with 121 billion reais in assets as of last March and a 13% return on equity for the first quarter of 2021. It also does corporate financing and owns stakes in smaller financial technology firms.

PagBank, PagSeguro’s digital banking unit, has been doing well on its own. PagBank could contribute about 40% of PagSeguro’s revenue by 2025, up from 8% in 2020, Morgan Stanley analysts including Jorge Kuri wrote in a May report.

Banco BV, formerly known as Banco Votorantim, is jointly owned by Brazil’s state-controlled bank Banco do Brasil SA and the billionaire Ermirio de Moraes family.

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