Cencosud S.A. (CNCO) said Monday that it has signed a binding MOU with Itau Unibanco Holding S.A. to jointly develop the financial retail business in Chile and Argentina.
Under the terms of the agreement, Itau Chile will acquire 51% of the shares of Cencosud Administradora de Tarjetas, Cencosud's credit card operator in Chile. In Argentina, Cencosud will create a new entity, in which Itau Argentina will contribute with equity, to jointly develop the business.
Additionally, in both countries Itau will provide funding to finance 100% of the current credit portfolio and future growth.
Cencosud will receive a total up-front cash payment of about US$1.58 billion, of which US$280 million will be from the sale of 51% share of Cencosud Administradora de Tarjetas and US$1.3 bilion in the form of payment of the credit card portfolio funding.
The term of the agreement is 15 years.
Cencosud said it does not expect that 2013 figures will materially change versus the guidance provided by it in February because of the deal.
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