September 5, 2018 / 8:32 AM / 3 months ago

France's Edenred joins Itau Unibanco to speed up growth in Brazil

* Itau Unibanco to distribute Edenred employee benefits in Brazil

* Itau Unibanco to also take 11 pct in Edenred’s Ticket Servicos

* Edenred says deal to boost group EBITDA, sales

* Shares up 4 pct

By Dominique Vidalon

PARIS, Sept 5 (Reuters) - French prepaid meal voucher and card provider group Edenred said on Wednesday it was teaming up with Brazilian bank Itau Unibanco to speed up its expansion into the country’s employee benefits market.

Edenred, which competes with caterers Sodexo and Compass, as well as credit card networks MasterCard and Visa, sells prepaid meal vouchers that employers offer to staff while also helping companies manage staff expenses.

Under an exclusive partnership, Brazil’s largest privately-owned bank, with more than 1 million corporate clients, will distribute Edenred’s local employee benefits services.

As part of the deal Itau Unibanco will buy for an undisclosed amount an initial 11 percent in Ticket Servicos, Edenred’s Brazilian subsidiary, with the possibility of increasing its stake in the future.

The deal will increase Edenred’s earnings before interest, tax, depreciation and amortisation (EBITDA) from the first year after it closes and add at least 1 percentage point to group sales growth, Chief Executive Bertrand Dumazy told reporters on a conference call.

“It’s a win-win deal that will accelerate our growth prospects. With the support of Itau Unibanco we aim to outperform the Brazilian employee benefits market over the coming years,” he added.

By 0744 GMT, Edenred gained 1.5 percent as Kepler Cheuvreux hailed a “smart combination” that will give Edenred greater access to medium-sized corporate clients in Brazil.

The brokerage also raised its rating on the stock to “buy” from “hold”.

Edenred has been present for more than 40 years in Brazil, which accounts for just under a third of group operating revenue.

Dumazy said Brazil’s employee benefits market had attractive prospects, representing a sizeable pool of more than 50 million employees with a track record of more than 10 percent compound annual growth during the past ten years.

Future growth in Brazil was likely to be fueled by an economic recovery despite current uncertainties tied to the presidential elections, he said.

Itau Unibanco will earn commissions from promoting Edenred’s benefits services to new customers through its network of 4,400 branches.

Reporting by Dominique Vidalon, editing by Louise Heavens

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