Banco Santander has revealed its plans to take full ownership in its Mexican subsidiary Santander Mexico through an exchange offer worth €2.56bn with minority shareholders.
Currently, the Spanish banking giant has a stake of around 75% in Santander Mexico, which was founded in 1991 under the name Grupo Financiero InverMexico. About six years later, the Spanish group acquired nearly 75% stake to rename it as Grupo Financiero Santander Mexicano.
During its annual general meeting, the Spanish banking group announced its plans to acquire up to 25% of the remaining stake in the Mexican bank.
Santander executive chairman Ana Botín said: “We believe in Mexico, in the potential of its financial sector and in Santander Mexico which is one of the leading banks in the country today.”
As per the transaction terms, tendering shareholders of the Mexican bank will exchange each of their shares for 0.337 of new Santander shares or will be issued 1.685 new Banco Santander American Depositary Shares (ADSs) for every ADS they hold in the Mexican subsidiary.
The Spanish banking group expects the transaction to have a positive impact on its capital. For the shareholders, it believes that the deal meets the group’s strategic and financial criteria, while providing an attractive return on invested capital and enabling it to boost net profit and organic capital generation.
Botín said: “For the minority shareholders of Santander México, it is an opportunity to monetize their shares at an attractive premium of 14%, gaining exposure to a diversified, global bank with growing and more predictable results than those of comparable peers.”
Earlier this month, the Spanish banking group disclosed its plans to invest more than €20bn over the coming four years in digital and technology to generate customer and revenue growth.
The banking group intends to boost customer loyalty by improving and personalizing customer experiences, while expanding a number of its digital products. Under one of the digital initiatives it intends to take, the Spanish banking group will launch its international payments solution, called Santander One Pay FX, to non-customers.
In February, the Spanish group signed an agreement worth around $700m with IBM to seek the latter’s service for the upgrade and expansion of its digital capabilities.