Santander to Acquire Canadian Auto Finance Company
Banco Santander has reached an agreement with Carfinco to acquire its Canadian business for $298 million Canadian dollars. Under the agreement, a new company will be formed in which Santander will own approximately 95% of the equity, while top management of Carfinco will retain 5%.
MADRID, Spain —Banco Santander has reached an agreement with the auto financing company Carfinco to acquire its Canadian business for $298 million Canadian dollars (CAD), approximately 210 million euros.
Carfinco is headquartered in Edmonton, Alberta, and operates in all 10 Canadian provinces. Its products are distributed through a network of 2,200 dealers, and the company has a geographically diverse loan portfolio of CAD $278 million and 29,500 customers as of June 2014.
Santander will pay CAD $11.25 in cash per share, representing a premium to shareholders of 32% above the volume-weighted average price over the last 90 trading days. As part of the agreement, Carfinco will also pay a special dividend to shareholders on the closing date. Carfinco’s board of directors has approved the transaction and will recommend that shareholders vote in favor.
“We are excited to sign this agreement with Carfinco, which allows us to enter a market with good growth potential such as Canada, where we hope to reach agreements with other car manufacturers like those we have signed in other countries,” said Juan Rodriguez Inciarte, senior executive vice president and head of Strategy at Banco Santander.
Under the transaction’s structure, a new company will be formed in which Santander will own approximately 95% of the equity, while top management of Carfinco, including the president and CEO, will retain the remaining 5% and will maintain their management roles.
“We are delighted with the value this all cash offer of $11.25 per share brings to our shareholders and this agreement with one of the top banks in the world, which will bring to the Canadian market their knowledge, experience and relationships in the auto finance industry,” said Tracy Graf, president and CEO of Carfinco.
Graf and other key executives will bring to Santander their experience and knowledge of the Canadian market to contribute to the future growth of the company, which registered an attributable profit of CAD $20.2 million in 2013.
Prior to the closing of the transaction, Carfinco will sell its subsidiary Persian Acceptance Corp., which develops the same activity in the United States.
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