Spanish Bank to Acquire Sovereign

Sovereign Bancorp is set to be acquired by Banco Santander, Spain’s largest bank, and already a 24.9 percent stakeholder. Negotiations took place last night and could conclude today, according to the Wall Street Journal, resulting in a sale of the struggling thrift-holding company.

Sovereign, one of the smaller banks suffering from the credit crisis, has seen its stock value plummet in the last few months, just as Santander has thrived, largely due to its avoidance of the debt vehicles that have sunk the U.S. market. Santander is expected to pay Sovereign’s Friday-close stock price of $3.81/share, valuing the bank at about $2.5 billion.

Spanish banks have behaved aggressively in recent years, staging many acquisitions in the United States. Banco Bilbao Vizcaya Argentaria, Spain’s second-largest bank, has purchased three U.S. banks since 2005, and has also acquired a 5 percent stake in China CITIC Bank. Santander’s play for Sovereign will help it compete with its biggest Spanish rival, as well as give it a strong presence in the United States.

Sovereign has about $80 billion in assets and operates around 750 branches, compared with Santander’s nearly $1 trillion in assets and over 11,000 branches. Sovereign shares opened this morning at $4.24, before declining back around their Friday closing price.