Banco Santander to Take Over Mexican Subsidiary with EUR2.6 Billion Offer -- Second Update
April 12 2019 - 6:11AM
Dow Jones News
--Banco Santander is looking to acquire roughly 25% of Santander
Mexico's share capital
--The EUR2.56 billion all-share offer is expected to be settled
in the second half of the year
--Santander Mexico shareholders who accept the offer would
receive Santander Group dividends from October
By Pietro Lombardi and Anthony Shevlin
Spain's Banco Santander SA (SAN.MC) intends to make a 2.56
billion-euro ($2.88 billion) all-stock offer for all the shares it
doesn't already hold in its Mexico subsidiary, as part of the
company's overall strategy to deploy more capital in Latin
America.
The Spanish bank said Friday that the offer for Banco Santander
SA Institucion de Banca Multiple Grupo Financiero Santander Mexico
(BSMX.MX) would be for up to approximately 25% of the subsidiary's
share capital.
Santander expects the deal will be neutral on earnings per
share, have a return on investment of around 14.5% and positively
contribute to the group's common equity Tier 1 ratio--a common
measure of banks' resiliency.
"We believe in Mexico, in the potential of its financial sector
and in Santander Mexico which is one of the leading banks in the
country today," Executive Chairman Ana Botin said at the bank's
annual general meeting.
Shareholders who accept the offer at the expected consideration
would receive 0.337 newly issued shares of Banco Santander for
every share of Santander Mexico, as well as 1.685 American
Depository Shares of Banco Santander for every ADS of Santander
Mexico.
The exchange ratio implies a 14% premium based on the closing
price of both banks' shares on April 11, or 22% based on the past
month's volume weighted average price, the bank said.
"The offer will be voluntary and, therefore, minority
shareholders of Santander Mexico may choose whether or not to
participate in the transaction, which will not be subject to a
minimum acceptance level," the bank said.
If all shares held by minority shareholders in Santander Mexico
are tendered in the offer, the Spanish bank would have to issue
around 572 million shares at the currently expected consideration,
which it says represents 3.5% of its current share capital.
"This transaction meets our strategic and financial criteria,
offers an attractive return on invested capital and allows us to
increase both net profit and organic capital generation," Ms. Botin
said.
Mexico contributed roughly 8% to the Spanish bank's underlying
profit last year, the fifth largest contributor among the bank's
core markets.
The exchange offer is expected to be launched and settled in the
second half of the year.
Santander doesn't intend to seek to delist Santander Mexico from
either the Mexican or New York stock exchanges, and the
shareholders accepting the offer will receive Santander dividends
from October 2019, the Spanish bank said.
"Mexico is attractive but [the] market may question whether deal
rationale was more capital driven given company's guide for neutral
EPS and 'slightly positive' CET1 impact at group level," U.S. bank
Jefferies said.
Write to Pietro Lombardi at pietro.lombardi@dowjones.com and
Anthony Shevlin at anthony.shevlin@dowjones.com
(END) Dow Jones Newswires
April 12, 2019 05:56 ET (09:56 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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