Brazilian firms Veirano Advogados and Pinheiro Neto Advogados have helped Citigroup and US Bancorp reach an agreement to sell their Brazilian card payment processing joint venture to local counterpart Stone Pagamentos, after months of negotiations over the banks' exit from the unprofitable venture.
São Paulo payment processor Stone Pagamentos turned to Timoner & Novaes Advogados for the acquisition. Stone is backed by billionaire Jorge Paulo Lemann, who owns part of Anheuser Busch InBev, the largest brewer in the world. The deal values Elavon do Brasil at around US$84 million, including debt and investments.
Veirano advised Bancorp, while Pinheiro Neto worked with Citigroup. Bancorp had owned a 50.1 per cent stake in Elavon, while Citigroup commanded the remaining 49.9 per cent. Alston & Bird is also thought to have advised Bancorp, but this was not confirmed before publication.
Stone Pagamentos was founded in 2012. Pinheiro Neto's Bruno Balduccini says unwinding a joint venture between two US financial institutions and transferring ownership to a relatively new Brazilian operation presented some challenges. "Another key variable to monitor throughout the deal was the fact that [Elavon] is in the process of obtaining its license to operate as a payment institution with the Central Bank of Brazil," he adds. "Having a target in such a transitory status (going from unregulated to regulated) created a number of unusual situations that required close attention from all lawyers involved."
Citigroup had been looking to exit Elavon since last year, after deciding against allocating the venture funds to bolster its diminishing finances. Pinheiro Neto helped Citigroup agree the joint venture back in 2010, with Veirano advising Elavon. Since then the credit card processing company has fallen short of expectations and failed to carve out a significant chunk of the payment services market, coming far behind competitors. It commands less than 2 per cent of the payment processing market, while Cielo, Rede and GetNet Serviços own a combined 97 per cent.
Elavon ended 2015 with US$56 million worth of negative equity. Stone has agreed to provide funds for the company's growth as part of the acquisition.
Banco do Brasil and Banco Bradesco also showed an interest in buying a stake in Elavon, but a deal fell through after antitrust regulators indicated it would be subject to restrictions before closing.
Counsel to US Bancorp
Veirano Advogados - Partner Roberto Rudzit and associates Graziela Pinto Lima, Diego Lecuona and Erica Alvarenga
Counsel to Citigroup
In house counsel - Pedro Rocha, Stella Pons, Julia Castilho and Sanil Padiyedathu
Pinheiro Neto Advogados - Partner Bruno Balduccini and associates Fernando Del Nero Gomes, Ricardo Binnie and Julia Durigan
Counsel to Stone Pagamentos
Timoner & Novaes Advogados - Partner Carlos Andre Teixeira Ramos Novaes and associates Simone Vulcano Medeiros, Carolina Pazello and Augusto Borsarelli Carvalho de Brito