Shareholders agree Spanish banking takeover

10th October 2011, Comments 0 comments

Spain's fifth biggest bank, Banco Pastor, said Monday its takeover offer for smaller rival Banco Popular has been accepted by the target bank's majority shareholders.

Their agreement effectively seals the all-share deal, worth a reported 1.36 billion euros ($1.8 billion).

The three major Banco Pastor shareholders representing a combined 52.28 percent of the equity "have accepted the terms of the offer," Banco Popular said in a statement.

The three shareholders are corporate foundation Fundacion Pedro Barrie de la Maza with 42.17 percent, Amancio Ortega, who owns the textile giant Inditex, with 5.06 percent and Tesalia with 4.04 percent.

Banco Pastor and Banco Popular shares were suspended from trading on Friday when they announced the takeover was being discussed.

The offer consists of:

-- 1.115 new Banco Popular shares in exchange for each Banco Pastor share. Based on the latest Banco Popular share price, that would value Banco Pastor's outstanding shares at 1.08 billion euros.

-- 30.9 new Banco Popular shares for each mandatory covertible bond in Banco Pastor. According to the daily El Pais, this part of the offer is worth another 277 million euros.

The Bank of Spain and the government have put pressure of Spanish banks to merge so as to lower costs and strengthen their balance sheets to cope with bad loans that piled up after the 2008 property market collapse.

The financial restructuring has already cut the number of savings banks from 45 to 15 through a series of mergers.

Banco Pastor was one of five Spanish banks that in July failed European Union stress tests to assess the ability of lenders to withstand a prolonged recession.

Shares in both companies were suspended before the announcement Friday. At the time Banco Popular was trading up 1.30 percent at 3.565 euros while Banco Pastor had gained 4.80 percent to 3.03 euros.

Banco Popular had total assets worth 130 billion euros ($174 billion) at the end of last year, compared to 31 billion euros for Banco Pastor.

© 2011 AFP

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