Popular’s wholly-owned subsidiary, Banco Popular de Puerto Rico (BPPR), completed its acquisition of certain assets and assumption of certain liabilities used by Evertec Group, a wholly-owned subsidiary of Evertec, to service certain BPPR channels.

As a result of the closing of the acquisition, BPPR acquired certain critical channels from Evertec Group, including BPPR’s retail and business digital banking and commercial cash management applications. BPPR also entered into amended and restated service agreements with Evertec Group pursuant to which Evertec Group will continue to provide various information technology and transaction processing services to Popular, BPPR and their respective subsidiaries. Popular also added approximately 165 employees and contractors from Evertec that support the servicing of the acquired assets.

Under the amended service agreements, Popular will have greater optionality to develop and enhance technology platforms and more flexibility to select service vendors, as Evertec Group will no longer have exclusive rights to provide certain of Popular’s technology services. The amended service agreements are projected to reduce service costs as a result of discounted pricing and lowered caps on contractual pricing escalators tied to the Consumer Price Index. As part of the transaction, BPPR also strengthened its relationship with Evertec in the payments business, including through the incorporation of a revenue sharing structure for BPPR in connection with its merchant acquiring relationship with Evertec.

“This transaction allows Popular to accelerate its ongoing digital transformation and continue improving our clients’ experience. With the ability to manage our key customer channels and greater flexibility to choose the best technology partners, we will be able to more quickly enhance the services that we offer through our digital platforms, as well as the sales and account maintenance processes we offer through all our channels. We aspire to provide an omnichannel experience that meets all of our clients’ needs and expectations,” Ignacio Alvarez, president and CEO of Popular, said.

As consideration for the transaction, BPPR delivered to Evertec Group 4,589,169 shares of Evertec common stock valued at closing at $169 million (based on Evertec’s stock price on June 30 of $36.88), resulting in an after-tax gain of approximately $112 million. The financial benefits of the transaction during the first full year following the closing of the transaction are expected to be offset as a result of the elimination of Popular’s earnings from its investment in Evertec, which is currently accounted for under the equity method. However, the financial effect of the transaction is expected to be accretive during future years due to, among other things, incremental merchant acquiring revenue sharing income and future price reductions in continuing services as a result of the amended service agreements with Evertec.