May 9, 2008 / 1:56 AM / 11 years ago

Brazil Bovespa, BM&F stockholders approve merger

SAO PAULO, May 8 (Reuters) - Shareholders in Brazil’s two main financial exchanges, Bovespa and BM&F, approved a merger plan on Thursday and elected a board for the new bourse that will trade stocks, currencies, commodities and futures.

The BM&F Bovespa SA will become the world’s third-biggest exchange by market value, negotiating 80 percent of stock deals in Latin America and over $67 billion in daily futures trades.

The boards of Bovespa Holding BOVH3.SA, which controls the Sao Paulo stock exchange, and BM&F SA BMEF3.SA commodities and futures exchange approved the tie-up plan in March.

Shareholders of Bovespa Holding will receive 1.24 billion reais ($734 million) in cash as part of the deal. The combined entity will issue shares on a 50-50 basis to BM&F and Bovespa Holding stockholders.

The tie-up will create a one-stop shop where investors will be able to trade everything from stocks and currencies to futures on interest rates and soybeans. It also will consolidate clearing of settlement of equity and derivatives trades, which would lead to cost savings.

The companies expect to achieve up to 25 percent in annual cost savings by 2010 with the combination.

The new entity said in a statement its stocks will be listed on Brazil’s New Market after the CVM securities regulator registers the BM&F Bovespa. Until then, stocks in the two companies will be negotiated normally.

BM&F stocks rose 2.61 percent to 17.7 reais on Thursday and Bovespa Holding gained 2.64 percent to 27.25 reais. The bluechip Bovespa index .BVSP rose 1 percent. ($1 = 1.69 Brazilian reais) (Reporting by Alexandre Caverni and Aluisio Alves, writing by Andrei Khalip; editing by Carol Bishopric)

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