- The transaction would be paid for with up to approximately 665 million shares of Banco Santander
- The offer reflects Santander’s confidence in its Brazilian subsidiary and in its long-term growth potential
- The offer is attractive to Santander Brasil shareholders, who will receive a 20% premium
- Banco Santander’s shares would be listed on the Sao Paulo stock exchange
Banco Santander’s Board of Directors has resolved to make an offer to acquire all shares of Banco Santander Brasil not already held by Grupo Santander, representing approximately 25% of Santander Brasil’s share capital. Banco Santander will offer a 20% premium over the last closing market price. The consideration offered under the transaction, which is expected to be completed by October, would be paid by means of Banco Santander shares.
The offer is voluntary and, therefore, minority holders of Santander Brasil may choose whether or not to participate in the transaction, which is not subject to a minimum acceptance level. Santander will acquire all shares held by shareholders accepting the offer and has no intention of causing the delisting of Santander Brasil from either the Sao Paulo stock exchangeii or the New York Stock Exchange. Banco Santander shares will be traded on the Sao Paulo stock exchange through Brazilian Depositary Receipts (BDRs).
Shareholders who accept the offer will receive, through BDRs or through American Depositary Receipts (ADRs), 0.70 newly-issued shares of Banco Santander for every unit or ADR of Santander Brasiliii.
If all shares held by minority shareholders were tendered in the offer, Banco Santander would have to issue approximately 665 million shares, which represent 5.8% of the current share capital (EUR 4,686 millioniv).
The offer reflects Banco Santander’s confidence in Brazil and its Brazilian subsidiary as well as the latter’s long-term growth potential. Santander offers Santander Brasil’s shareholders the opportunity to exchange their shares for a 20% premium or to remain as shareholders in Santander Brasil.
The transaction is beneficial for Banco Santander Brasil’s shareholders as well as for the shareholders of the parent company, Banco Santander. Minority shareholders of Banco Santander Brasil will profit from the transaction since they will be awarded a 20% premium, which entails a higher Price Earnings Ratio (PER) than that of its competitors, according to market consensus. Moreover, given that consideration takes the form of shares of Banco Santander, minority shareholders will continue to benefit from exposure to Brazil as well as from a security with high diversification and growth prospects.
The transaction is also beneficial for the shareholders of Banco Santander, given that it will increase their Earnings Per Share (EPS) from the outset. The market consensus anticipates that Santander Brasil will obtain a profit close to 6,400 million of reais brasileiros in 2015 (equal to, approximately, EUR 2,000 million) from which, with its current share capital participation, approximately EUR 1,500 million would be attributable to Grupo Santander. Therefore, if all shares held by minority shareholders are tendered in the offer, Santander Brasil would contribute to Grupo Santander with an additional amount of approximately EUR 500 million in 2015, entailing a 1.3% increase in the EPS in 2015 and a 1.1% increase in the EPS in 2016. The impact of the transaction on the core capital would be almost neutral, since, in the event that all the minority shareholders accepted the offer, this would contribute three basis points to the core capital.
The offer will be subject to customary conditions for this type of transaction, including the granting of the relevant regulatory authorizations and approval at Banco Santander’s general shareholders’ meeting.