FIS and Banco Bradesco stay friends as JV ends
FIS has signed an agreement to unwind its joint venture (JV) and enter into a long term commercial agreement to provide current and new solutions and services to Banco Bradesco in Brazil.
New services include software application licensing and management, card portfolio migration for the bank’s 40 million card customers, business process outsourcing and fraud management.
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“We’ve enjoyed a successful partnership with FIS for nearly a decade, and we look forward to their continued support of our card payments business,” says Cesário Nakamura, director of Bradesco.
According to FIS, without the JV structure and overhead, Bradesco will achieve cost savings, and FIS will benefit from its ability to compete independently in the market. FIS will continue to provide ongoing services to all non-Bradesco customers currently in the JV on a direct basis.
At closing, the parties will spin off all of the JV assets which service the non-Bradesco customers of the JV, and those assets needed to provide the new and continuing services that FIS will then provide directly to Bradesco to a new entity owned by FIS. This will include, at closing, transferring approximately 40% of the current JV workforce to the new FIS entity.
The transactions are subject to approval of the Brazilian Central Bank and Trade Commission (CADE) and customary contractual provisions, and are expected to close by the second quarter of 2019.
FIS explains that the annualised expected impact of the deconsolidation of financials from the dissolution of a JV in which FIS owned 51% and Bradesco owned 49% would be to reduce FIS reported revenue by approximately $200 million.
Additionally, FIS expects a one-time non-cash pre-tax charge of approximately $100 million, primarily due to the write-off of goodwill and intangibles associated with the transaction, which would reduce net earnings attributable to common stockholders.
FIS adds that on a non-GAAP basis, the deconsolidation of financials is not expected to have an impact on organic revenue growth, adjusted EPS or free cash flow.
