A Half-Deal

By: Carla Larangeira and Marco Di Maggio and Pedro Levindo

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Synopsis: In June 2020, XP and Ita faced intensified competition and tension in their partnership, with the latter owning a minority stake at XP. Two years earlier, in May 2017, Ita had announced it would acquire 49.9% of XP for $1.8 billion, followed by three additional stages leading to company control. Yet in August 2018, Brazil's Central Bank, partially barred the deal, stating Ita could become a minority shareholder.Tensions surfaced as soon as the deal was formalized, with both companies engaging in public attacks across several marketing campaigns, with Ita estimated to lose around $27 million a day to XP from client migration. Moreover, XP faced increased competition from emerging investment platforms that were gaining ground in Brazil s market. By mid-2020, XP s financial results had skyrocketed, taking in $190 million in net income and $743 million in total revenues. As Guilherme Benchimol, XP s CEO, looks ahead, he must define what strategies they should pursue to achieve further growth, considering competitive forces and market opportunities at hand.