On January 23, 2014, the stock market history of Santander Consumer USA (SCUSA), the US consumer subsidiary of Banco Santander, began, which has lasted seven and a half years. The Spanish bank has launched this Friday a public acquisition offer (takeover bid) on 19.75% of the capital that it does not yet control to acquire 100% and remove it from the Stock Market.
Banco Santander considers that its offer reflects an “attractive value” for shareholders, who will receive $ 39 per share, which will require an outlay of $ 2.3 billion (€ 1.941 billion). As reported by the company, the price includes a premium of 7.4% compared to its last price last Wednesday, established at 36.32 dollars, and 30.4% compared to its weighted average price since January 1. . In 2014, its starting price was $ 23.75. The entity chaired by Ana Botín has explained that it will vote against any sale, merger or alternative transaction to the exclusion proposal.
After Santander, the main shareholders of Consumer USA are the fund manager Fidelity (4.5%), Dimensional Fund Advisors (2.06%), Vanguard Group (1.92%) and BlackRock (1.86%), according to Bloomberg data consulted by Europa Press.
The IPO was made under the presidency of Emilio Botín, when Spain was going through difficult times due to the 2008 financial crisis, while the United States had already entered into full recovery. That operation gave Santander net capital gains of 740 million euros. Demand for shares by institutional investors outpaced supply 10 times and shares rose 5% on the day of the market release.
The American adventure started in 2006
The US auto finance firm has been a successful investment for the bank, but it has seen ups and downs from criticism it has received from supervisors. Santander’s American adventure began in 2006, with the purchase of the Boston bank, initially called Sovereing Bank. In 2008 it took over 100% of the capital. Between 2014 and 2017, the supervisors prohibited them from distributing dividends due to internal control problems of risks and deficiencies in capital. The subsidiary suspended the stress tests of 2015
In parallel, Santander acquired in 2006 from HBOS (the merger of Halifax bank and Bank of Scotland) and the company’s founding partners 90% of the capital of Drive Financial (which in 2008 changed its name to Santander Consumer USA) for 651 million dollars. In 2011, the bank added partners through a capital increase, reducing its stake to 65% and generating a capital gain for the group of $ 1 billion as a result of the company’s value increase to $ 4 billion.
Issues for the consumer affiliate
In 2015, when the bank suspended the stress tests and coinciding with the arrival of Ana Botín to the presidency, problems came to the consumer subsidiary. It had to redo the accounts for the years 2013, 2014, 2015 and the first quarter of 2016, “due to the errors identified in each of these periods”, although the errors were detrimental to the results of the firm. In 2016, Thomas Dundon, the former president and chief executive of the Santander subsidiary, left the entity. Now the division of the United States is one of the most relevant. In 2020, the bank obtained 731 million euros in profit in this country, 10% of the group’s total, an increase of 2% compared to the previous year.
Regarding the operation announced this Friday, Santander wants to reinforce the equity of Santander Holdings USA, a company that brings together SCUSA and Santander Bank (the former Sovereign), up to 2,000 million dollars, to support growth plans in the United States.
The president of the American subsidiary Santander Holdings USA, Timothy Ryan, affirms in a document sent to the market supervisors – and with a copy to Botín and his counterpart in the financial SCUSA, William Rainer – that the entity is in a position to carry out the operation quickly thanks to the good knowledge of the company. The offer is still subject to the approval of the SCUSA financial company board of directors and the negotiation and execution of the definitive documentation of the operation.
Given the majority shareholding, the entity details that a special committee of independent directors with no interests in the operation will consider the offer and will be in charge of issuing a recommendation on it.