Banco Santander has agreed to acquire entire issued and to be issued share capital of Alliance & Leicester in a $2.6 billion deal.
Under the terms of the acquisition, Alliance & Leicester (A&L) shareholders will receive one Santander share for every three A&L shares. Based on the closing price of E11.23 per Santander share on July 11, 2008, being the last business day prior, the acquisition values each A&L share at GBP0.3 and the existing issued share capital of A&L at approximately GBP1.26 billion, representing a premium of approximately 36.4% to the closing price of GBP0.22 per A&L share on July 11, 2008.
A&L believes that the acquisition allows the combination of the group and Abbey’s complementary business operations, enhancing the positioning of the products and services offered by the group, benefiting customers. This is expected to reduce funding pressures on Alliance & Leicester and help strengthen Santander’s existing Abbey business.
The acquisition is conditional on, among other things, certain approvals by Santander shareholders and A&L shareholders and the sanction of the scheme by the court. Merger control approvals and regulatory clearances from, inter alia, the Financial Services Authority and the Bank of Spain will also need to be obtained.
Emilio Botin, chairman of Santander, said: The transaction meets Santander’s return on investment target as well as being accretive for Santander Shareholders. We are very pleased to be working with the management and employees of A&L as we seek to build with Abbey one of the leading franchises in the UK banking sector.