Santander offers share swap for remaining stake in Brazilian unit

Santander plans to launch a share swap offer to acquire the remaining shares in its Brazilian unit, Santander Brasil, at a 15% premium to its closing price.

Spanish bank ​Santander said on Thursday it intends ‌to launch ​an offer to acquire the remaining shares it does not already own in its Brazilian unit, through a share ‌swap.

Santander, which owns some 90% of its Brazilian subsidiary, said in a statement the offer "will be voluntary, does not seek the delisting of Santander Brasil and is not subject to ‌a minimum acceptance condition." Santander's share swap impliesa 15% premium over Santander Brasil's closing price on ‌Thursday in a transaction valued at up to 1.9 billion euros.

The proposal comes one day after Santander Brasil reported its weakest quarterly profit and profitability since late 2023, missing market expectations as tighter lending ⁠spreads and higher ​provisions for bad ⁠loans weighed on earnings. Shares in the Brazilian unit, which had an initial public offering in Sao Paulo ⁠in 2009, fell over 21% in the year-to-date, compared to a nearly 10% increase in the ​Brazilian equities benchmark stock index Bovespa.

The Spanish bank said the transaction is expected ⁠to "strengthen the group's long-term earnings growth and organic capital generation," while having a neutral impact on capital ratio, the ⁠Spanish ​bank added. If all minority shares are tendered, the Spanish parent will issue about 156 million new shares, equivalent to about 1.1% of its current share capital.

Santander increased ⁠its stake in its Brazilian unit in 2014, in a deal that could also ⁠have included all ⁠of the remaining shares. The bank announced the delisting of its Mexican unit in 2023. ($1 = 0.8678 euros)