Santander Completes the Acquisition of 19.8% of Sovereign Bancorp
June 01 2006 - 1:30AM
PR Newswire (US)
- Santander has Acquired 19.8% of Sovereign for a Total Investment
of $2.395 Billion. MADRID, Spain, June 1 /PRNewswire-FirstCall/ --
Grupo Santander has completed the acquisition of 19.8% in Sovereign
Bancorp as provided for in the investment agreement announced in
October 2005, having obtained the necessary approval from the
relevant regulatory and supervisory agencies. Under the agreement,
Santander has subscribed to a capital increase by Sovereign of
$1.931 billion and has bought $464 million in Treasury Stock, at a
price of $27 a share in both cases, resulting in a total investment
of $2.395 billion (about EUR 1.860 billion), and generating
goodwill of $703 million. Sovereign will use the funds from these
purchases, together with the proceeds of the placement of preferred
shares and other funds, to acquire 100% of Independence Community
Bank Corp. (ICBC) of New York for $3.596 billion. As is provided
for in the agreement, Santander expects to increase its interest in
Sovereign to 24.99% through open market purchases. "We are very
pleased to complete this investment within the announced
timetable," said Juan Rodriguez Inciarte, Executive Vice President
of Santander. "Sovereign has created an excellent regional banking
franchise in the U.S. Northeast while also generating value for its
shareholders. We believe Santander's investment and the acquisition
of Independence Community will contribute to continuing this
long-term creation of value, for Sovereign as well as for Santander
shareholders, employees and customers." The agreement also
stipulates that, with certain exceptions, for five years from the
initial investment, Santander will not raise its stake above 24.99%
nor sell it to third parties. Two years from the initial
investment, Santander can offer to acquire 100% of Sovereign,
according to a procedure set forth in the agreement, or maintain
its stake. After five years, Santander may divest the stake. Under
the agreement, Santander's voting rights in Sovereign will be
limited to 19.99%, unless Santander acquires 100% of Sovereign or
Sovereign's non-Santander shareholders vote to allow Santander to
vote all of its shares. Santander will account for its stake in
Sovereign through the equity accounting method. The investment is
expected to have a positive effect on earnings per share from its
inception. As part of this agreement, Sovereign will name Emilio
Botin, Chairman of Santander, and Juan Rodriguez Inciarte,
Executive Vice President, as members of its Board of Directors.
Santander has proposed to its Annual General Meeting, scheduled for
June 17th, 2006, the appointment of Jay Sidhu, Chief Executive of
Sovereign, as a member of the Santander Board of Directors.
Santander (SAN.MC, STD.N) is the largest bank in the euro zone and
the fourth largest in Europe by market capitalization. Founded in
1857, Santander has EUR 809 billion in assets and EUR 961 billion
in managed funds, more than 66 million customers, 129,000
employees, and 10,200 offices in 40 countries. It is the largest
financial group in Spain and Latin America, and has significant
market positions elsewhere in Europe, including the United Kingdom
through its Abbey subsidiary and Portugal, where it is the third
largest bank. Through Santander Consumer Finance, it also operates
a leading consumer finance franchise in Germany, Italy, Spain and
nine other European countries. In 2005, Santander recorded EUR 6.22
billion in net profit, up 72.5% from the previous year. For more
information on Santander, visit http://www.gruposantander.com/.
Sovereign Bancorp, Inc., ("Sovereign") (NYSE:SOV), is the parent
company of Sovereign Bank, a pro forma $83 billion financial
institution with nearly 800 community banking offices, over 2,000
ATMs and approximately 12,000 team members with principal markets
in the Northeast United States after giving effect to the
Independence acquisition and recently announced branding agreement
in which Sovereign ATMs will be placed in CVS/pharmacy locations.
Sovereign offers a broad array of financial services and products
including retail banking, business and corporate banking, cash
management, capital markets, wealth management and insurance.
Sovereign is the 18th largest banking institution in the United
States. For more information on Sovereign Bank, visit
http://www.sovereignbank.com/ or call 1-877-SOV-BANK. DATASOURCE:
Sovereign Bancorp, Inc. CONTACT: Peter Greiff, +34-91-289-5207, or
Angela Roche, +34-91-289-2398, both of Sovereign Bancorp, Inc. Web
site: http://www.gruposantander.com/ http://www.sovereignbank.com/
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