Scotiabank to Increase its Stake in Scotiabank Chile

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.

Transaction Details

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.

CEO Commentary

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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