Santander to acquire Sovereign Bancorp

by Richard Kilner

Story link: Santander to acquire Sovereign Bancorp

Banco Santander, which presently owns 24.35% of Sovereign Bancorp, is to purchase the remaining 75.65% after the proposal was put forward by the Capital and Finance Committee, which consists of independent directors of Sovereign.

The Executive Committee of Santander agreed with the proposal, as did non-Santander Sovereign directors, and Sovereign shareholders are to be given 0.2924 Banco Santander American Depository Shares (ADSs) for every single share of common stock they have in Sovereign.

The deal is worth approximately €1.4bn, or US$1.9bn, and complies with Santander’s strategic and financial approach to acquisitions, with the expectation that the deal will prove profitable as well as improving the Group’s geographical reach.

Ralph Whitworth, chairman of Sovereign’s Capital and Finance Committee, has stated that the deal is right given the current turbulence in the economy, and that it would help ensure stability for the firm.

Juan Inciarte, an Executive Committee member of Santander, has described the deal as an excellent opportunity for the Spanish bank, explaining that Sovereign enjoys a presence in some of the USA’s most prosperous regions with high growth potential.

The deal remains subject to shareholder and regulatory approval in both Spain and the USA.