Spanish bank to buy Sovereign - $1.9B

Pennsylvania-based thrift agrees to stock-for-stock transaction with Banco Santander.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

Will the U.S. lose its position as the world's financial superpower?
  • Yes
  • No
Will the U.S. lose its financial superpower status?
Have your say

NEW YORK (CNNMoney.com) -- Spanish bank Banco Santander, S.A. will acquire Sovereign Bancorp in a stock-for-stock transaction valued at about $1.9 billion, the companies announced Monday.

Under the terms of the agreement, Sovereign shareholders will receive 0.2924 Banco Santander American Depository Shares (ADSs) for every 1 share of Sovereign common stock they own.

Based on the closing stock price for Santander ADSs on Friday, the transaction is valued at approximately $1.9 billion, or $3.81 per share.

Santander, the largest bank in the euro zone by market capitalization, currently owns 24% of Sovereign's ordinary outstanding shares.

"Given the unprecedented uncertainty in the current market environment and the challenges facing Sovereign, we believe this is the right transaction at the right time for Sovereign," said Ralph Whitworth, Chairman of the Capital and Finance Committee of Sovereign's Board of Directors.

The Wyomissing, Pa.-based Sovereign is grappling with increasing loan losses. Its second-quarter net chargeoff rate more than tripled from levels a year prior.

But the deal is subject to necessary bank regulatory approvals in the U.S. and Spain and approval by both companies' shareholders.

Sovereign's parent company tapped former Chittenden Corporation CEO Paul A. Perrault to replace Joseph P. Campanelli, effective Jan 3. CFO Kirk Walters is serving in the interim.

Campanelli served as the bank's president and CEO, following the 2006 resignation announcement of his predecessor, Jay S. Sidhu.

Sovereign Bancorp is the parent company of Sovereign Bank, with 750 branches and about 12,000 employees, with a major presence in the Northeast.  To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Tech's highest paid women Silicon Valley isn't known for its diversity, but it is home to a handful of highly paid female executives. More
9 reasons to be hopeful about women in tech These startups are working to leverage technology to level the playing field for minorities and women in tech. More
10 best states to retire in Forget Florida. Residents of these states are happy, safe, and have good health care -- all for the right price. More
Sponsors