Press release-EGM

RNS Number : 9501D

Banco Santander S.A.

22 September 2008

 



Press release                

Santander shareholders approve 
capital increase for the acquisition of A&L

• Emilio Botín said that the transaction will generate significant synergies and fits perfectly with the expansion plan in the UK, creating value for customers, employees and shareholders of both banks.

Madrid, September 22, 2008 - The Extraordinary General Meeting of Banco Santander approved today a share capital increase to finance the acquisition of Alliance & Leicester plc, in accordance with the offer of acquisition announced last July 14th. The Bank's Board of Directors has been authorized by the shareholders to increase the share capital through the issuance and release of 143,376,990 shares, approximately 2% of the share capital of Banco Santander. The Extraordinary General Meeting has also approved the delivery of 100 Banco Santander shares to every employee of Alliance & Leicester group as a special grant once the transaction is completed, which we expect to occur on Oct. 10.

The acquisition, pending the relevant approvals, will be made through an exchange of one Banco Santander share for every three Alliance & Leicester shares and marks an important step in developing the franchise in the U.K., where Santander has been present since it acquired Abbey in 2004. Since then, Abbey has significantly improved its efficiency ratio, to 50% from 70%, has entirely integrated the Partenon technological platform and has become a competitor to watch in the UK.

In his speech before the Extraordinary General Meeting, the Chairman, Emilio Botín, said that the transaction 'fits perfectly with our strategy and creates value.' Moreover, he said it 'enables us to grow much more rapidly in the businesses we are most interested in the UK.' 

'Before this acquisition opportunity emerged, we had an expansion plan focused on the business sector that included the opening of 300 branches, to achieve critical mass through organic growth. The acquisition of Alliance & Leicester enables us to accelerate that U.K. expansion plan by three years,' explained Botin. 'It is a market we have known very well for many years, thanks to our alliance with Royal Bank of Scotland and our presence on its Board. We are sure that we can add value to the British market by putting into practice our business model, based on customer service, costs control and prudence risk management.'

The transaction has been already recommended by the British bank's Board to its shareholders, who approved it by a majority of 96.8% of the share capital in the General Meeting held on September 16th. The same day, the European Commission announced its approval of the acquisition in accordance with the European competition rules. 

Botín said that the transaction is very positive for both Alliance & Leicester's employees, customers and shareholders and those of Santander, as 'we acquire at a price that enables us to meet our financial criteria, with a positive impact on earnings per share from the first year and a return on investment (ROI) of 19% in the third year. It is clearly higher than our cost of capital.' The Bank estimates that the cost synergies derived from the integration will amount to GBP 180 million, with low execution risk. This is 'because we know the U.K. market very well we have very clear ideas of what we want to do and how quickly we want to do it,' the Chairman told shareholders.

During his speech, Botín also referred to the difficult global economic environment and the instability of the financial system. 'Banco Santander is better prepared than our competitors to face this situation', he said. He recalled that 'we have had excellent results in the first half, with growth of 22% from same period of last year. 

In his opinion, 'In difficult times like the present, you need to sharpen management, emphasize cost control and be alert.'

 

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