Bank of Nova Scotia (TSE: BNS) (NYSE: BNS) announced Monday that it has entered into an agreement to acquire the remaining 16.8% stake of Grupo Said in Scotiabank Chile, which will bring its stake in the Chilean entity to 99.8%.
This transaction is subject to regulatory approvals and the satisfaction of customary closing conditions.
The transaction is valued at approximately C$1.3 billion. Upon closing, Scotiabank will pay C$650 million in cash and issue 7 million shares of Scotiabank to Grupo Said.
This will have an effect of approximately 10 basis points on the bank’s Common Equity Tier 1 capital ratio.
Scotiabank president and CEO Brian Porter said, “Today’s announcement enables us to achieve even greater scale and deliver the highest value for customers, further strengthening our position as a Leading Bank in the Americas. Our long-standing relationship with the Said family will remain a significant benefit to us as we build on our momentum in Chile over the coming years.”
Wall Street’s Take
On February 23, National Bank Financial analyst Gabriel Dechaine kept a Hold rating on BNS and raised the price target to C$90 (from C$86). This implies 1% downside potential.
The rest of the Street is bullish on BNS with a Strong Buy consensus rating based on six Buys and two Holds. The average Bank of Nova Scotia price target of C$97.87 implies 7.6% upside potential to current levels.
TipRanks’ Smart Score
BNS scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock returns have strong chances to beat the overall market.
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