Brazilian credit card processor StoneCo (STNE.O) in talks to buy software company Linx SA (LINX3.SA) the largest software developer in retail management systems in Latin America in a 6.04 billion reais ($1.12 billion) stock and cash deal that will transform it into an integrated provider of software and payments.
Under the terms of the deal, each Linx common share will be contributed to StoneCo in exchange for one newly issued StoneCo Class A preferred share and one newly issued Class B preferred share, which is the equivalent of 33.7625 reais for each Linx share.
Based on Monday's closing price the companies exchange represents a 29% premium to Linx stock, which has a market value of more than $1.1 billion.
Linx will emerge as a new software business unit of StoneCo, managed by executives from both companies once the deal is agreed.
The deal has a breakup fee of 605 million that Linx would pay StoneCo in case of antitrust problems or a competing offer. If shareholders do not accept the offer, the breakup fee is 25% of that amount.
StoneCo will finance the deal with a $1 billion share offering.
Shares in Linx surged 31.5% after it announced negotiations for a deal in the afternoon, while U.S.-listed StoneCo’s shares gained 11% at 52.39 on the stock market today, amid reports a deal was near.
