The stock exchanges of Colombia and Peru are planning a corporate merger that will be the first-ever cross-border fusion of stock markets in Latin America, the two exchanges said Wednesday.
The merger is separate from a planned integration of trading between the stock exchanges in Colombia, Peru and Chile slated to happen this year.
Stock-market officials said, however, that the two projects should complement each other.
“The merger is an opportunity for our industry to increase value for the [traded] companies by way of operating efficiency and the development of new products for both markets,” said Colombian Stock Exchange President Juan Pablo Córdoba.
Gustavo Urrutia, an economist with brokerage Inteligo in Peru, said that beyond helping both markets to develop, the merger could speed up the trading integration of the two exchanges because directors will more easily be able to make joint decisions.
The two exchanges, the Colombian Stock Exchange and the Lima Stock Exchange, have already signed a memorandum of understanding for the merger, but both boards still need to approve the final details. The merger is expected to close sometime after March.
“The merger of the stock exchanges will create a strategic alignment, which will strengthen our position among regional capital markets and help complement market integration, supporting solid, strong growth,” the director general of the Lima Stock Exchange, Francis Stenning, said.
The shareholders in each exchange will become shareholders of the new company, the stock markets said in a joint statement.
The companies that trade on both exchanges will have a total market capitalization of $378 billion. The Colombian side of the merger will control 64% of the new company while the Peru side will control 36%.
The new firm will have consolidated revenue of $45.8 million, based on 12-month results through September of last year.
The stock markets said the merger will allow for a “new, more competitive actor that can face the challenges of globalized capital markets.”
Analysts at Celfin Capital in Medellín, Colombia expressed some concerns over how trading fees might be set by the merged company.
“It will be interesting to see if we get some sort of coordinated fee structure given the continuing complaints about the cost of trading in Lima,” the analysts said in a note to clients.
(Dan Molinski / Dow Jones Newswires)
