As part of the transaction, a subsidiary of SHUSA will be merged into SC, with SC surviving as a wholly-owned subsidiary of SHUSA
A Santander branch in Rio de Janeiro, Brazil. (Credit: Junius/Wikipedia.)
Santander Holdings USA (SHUSA) has agreed to acquire all the remaining shares of its Santander Consumer USA Holdings (SC) at $41.50 per share for a total consideration of $2.5bn.
SHUSA currently owns around 80% of SC’s outstanding shares of common stock.
The transaction includes a second-step merger, where a wholly-owned subsidiary of SHUSA will be merged into SC, with SC surviving as a wholly-owned subsidiary of SHUSA.
The purchase price indicates a 14% premium to the closing price of SC common stock of $36.43 as of 1 July 2021 and values the company at $12.7bn.
Also, it represents an increase of 6.4% from the initial price of $39 per share, or a cash consideration of around $2.36bn that SHUSA offered last month.
The transaction is not subject to shareholder approval and is expected to close in the fourth quarter of this year, subject to customary closing conditions including regulatory approvals.
SHUSA’s board of directors unanimously approved the transaction, while the board of directors of SC formed a special committee to evaluate and negotiate the agreement.
Upon the unanimous recommendation of the Special Committee, the board of directors of SC unanimously approved the transaction, said the company.
J.P. Morgan Securities served as a financial advisor and Wachtell, Lipton, Rosen & Katz as legal counsel to SHUSA on the transaction.
Also, Piper Sandler served as a financial advisor and Covington & Burling as legal counsel to the special committee, while Hughes Hubbard & Reed served as legal counsel to SC.
SHUSA, a wholly-owned subsidiary of Madrid-based Banco Santander, holds five entities in the US, with more than 15,000 employees, and $150bn in assets as of end-2020.
SHUSA said: “The transaction is expected to immediately contribute to Banco Santander, S.A.’s earnings and provide an effective deployment of capital.
“The estimated capital impact at closing to SHUSA’s CET1 ratio is a decline of 73 bps. The estimated capital impact at closing to its parent, Banco Santander, would be a decline of approximately 10 bps in its CET1 ratio, and the Transaction is expected to be accretive to its earnings per share by approximately 3% in 2022.”