Banco Santander has decided to strengthen its commitment to Mexico. The entity chaired by Ana Botín has launched an acquisition offer on Friday for 25% of the capital stock of Santander Mexico that it still does not control to take over the total ownership of its subsidiary. With this operation, which will pay the current minority shareholders of the Mexican entity through an exchange of shares, the Cantabrian group seeks to increase its weight in the Ibero-American market where it is growing the most.
The exchange offer, which the entity will launch and plans to close in the second half of this year and is voluntary and not subject to a minimum percentage of acceptance, contemplates the delivery to the current owners of that 25% of Santander Mexico of 0.337 shares of new issue of Santander by each of the Ibero-American subsidiary, as well as 1,685 "American depositary shares" (ADS) of Santander for each ADS of Santander México. This implies a premium of 14% on the closing price yesterday of the shares of both Santander and Santander Mexico.
This will force Santander to increase its capital by 572 million new shares, 3.5% of its share capital, valued at 2,560 million euros. In return, the bank expects to obtain a return of 14.5% from this investment and that its ratio of maximum quality capital (CET1) will improve. "The transaction is consistent with Santander's strategy to increase its weight in growing markets and reflects Banco Santander's confidence in Mexico and its subsidiary as well as its long-term growth potential," the group said in a statement sent to the National Securities Market Commission (CNMV) on the same day it holds its shareholders meeting in Santander.
Santander entered Mexico in 1996, buying 75% of its current subsidiary in an operation that was signed then by the group's current president, Ana Botín. The division contributed last year to the income statement a profit of 760 million euros, 14% more and 8% of the bank's profits, showing some of the highest growth of the bank in Iberoamerica. Santander Mexico is the third bank in the country and generates a profitability (ROTE) of 20%.