Banco Santander unit to buy US consumer company for $ 2.5 billion

The Polish unit of the Spanish Santander logo (Santander Bank Polska) is pictured in Warsaw, Poland on May 10, 2021. REUTERS / Kacper Pempel

  • Bank increases offer to $ 41.5 p / shr in cash from $ 39 for around 20% of SC US
  • Scores a 14% premium on the eve of the deal announcement on July 1
  • The operation will have a capital impact of 10 basis points on the capital of the bank’s group

Aug 24 (Reuters) – Santander’s U.S. business is to buy the minority stake in its consumer unit it doesn’t already own for around $ 2.5 billion, a price slightly higher than it agreed to to pay in July.

The deal values ​​the entire Santander Consumer unit in the United States at $ 12.7 billion, Santander said in a statement.

The $ 41.5 per share offer to buy back about 20% of its U.S. consumer business is a 6.4% increase from the $ 39 per share or $ 2.36 billion it had initially offered to pay.

Santander also said that on Tuesday offer price represents a premium of around 14% over the company’s last close on July 1, when the deal was first announced.

At 07:55 GMT, Santander stock was down 0.44% against a slight drop of 0.1% for the European Dow Jones Banking Index (.SX7P).

Santander tried to consolidate some of its activities under tighter control. Earlier this year, he offered to buy out the minority stake in his Mexican company that he did not already own, having taken full control two years earlier when it was delisted.

Santander said the deal would negatively impact capital by 10 basis points to the group’s senior core capital ratio and increase its earnings per share by around 3% in 2022.

Santander finished with a fully loaded Tier 1 core capital ratio of 11.7% at the end of June, up from 11.85% three months earlier. Read more

Spanish investment firm Alantra said the impacts reported by Santander were roughly in line with their estimates and is part of the eurozone’s second-largest bank in terms of market value to allocate more capital to units with margins. higher profitability within the group.

A spokesperson for Santander said the transaction would also allow it to manage business by customer segments in line with their US peers, and would also have a positive impact on the group’s earnings per share and its return to funds ratio. own tangible, a measure of profitability. .

The transaction has been unanimously approved by the boards of directors of both companies and is expected to close in late October or in the fourth quarter of 2021.

Report by Jesús Aguado in Madrid and Ann Maria Shibu in Bengaluru; Editing by Subhranshu Sahu, Shounak Dasgupta and Mike Harrison

Our standards: Thomson Reuters Trust Principles.

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