Itaú-CorpBanca merger plan draws fire from U.S. investor

Tue Mar 4, 2014 2:54pm EST
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By Guillermo Parra-Bernal and Paritosh Bansal

SAO PAULO/NEW YORK (Reuters) - An activist U.S. investor has asked Chilean bank CorpBanca SA COB.SN to reconsider its approval of a merger with Brazil's Itaú Unibanco Holding SA (ITUB4.SA: Quote) and to launch a new auction, alleging CorpBanca had sold its minority investors short while benefiting its key shareholder.

The deal with Itaú, worth about $3.7 billion, undervalued the bank's shares and gave special benefits to Chilean billionaire Alvaro Saieh and his investment holding company Corp Group, hedge fund Cartica Management told the board of CorpBanca in a letter late on Monday.

Cartica, which manages more than $2 billion and owns 3.2 percent of the Chilean bank, published the letter on its website on Tuesday, confirming an earlier Reuters report.

Santiago-based CorpBanca did not immediately comment.

Efforts to reach Itaú's press officials were unsuccessful in Brazil, where many businesses were closed through midday Wednesday for the Carnival holiday.

Cartica's move, a rare instance of investor activism in the region, threatens to upset Latin America's largest banking merger since 2008 and further underpins the difficulties facing the deal.

CorpBanca executives have previously defended the deal, which was announced at the end of January, saying an association with Itaú would help catapult it into a regional leader.

Itaú was not obliged to launch a tender offer in Chile for CorpBanca because the deal with CorpBanca did not give the former more than 50 percent of the Chilean lender, executives said at the time.   Continued...

People walk in front of a CorpBanca branch office in downtown Santiago January 29, 2014. REUTERS/Ivan Alvarado