Report
Expert Corporate Governance Service (ECGS)
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Banco Santander, 23 July 2019

The EGM is called to authorize the Board of Directors to increase the share capital to acquire all the shares of Santander México not held by the Santander Group (equal to 25% of the share capital) in an exchange offer. Santander México's shares are traded on the Bolsa Mexicana de Valores ("BMV"), and, by means of American Depositary Shares ("ADS") each representing 5 shares, on the New York Stock Exchange ("NYSE").The shareholders of Santander México will receive (a) 0.337 Banco Santander shares for each share held, or (b) 1.685 Banco Santander ADSs for each ADS. After the transaction, new Banco Santander shares and ADSs issued in implementation of the offering will be traded on the BMV and the NYSE, respectively.The maximum number of Banco Santander shares to be issued under the offer is estimated at 570'716'679, equal to 3.5% of existing share capital. The exchange ratio entails a 14% premium based on the closing market prices on the day prior to the announcement of the offer, or a 22% premium based on the volume weighted average price for the one month prior to the announcement. In our opinion, the transaction is consistent with Banco Santander's strategy of increasing its weight in markets with high growth potential, and the premium offered to Santander México's shareholders is in line with the 23.3% average merger and acquisition premium to 4-week stock price in the European Financials sector in 2018. Also considering as reasonable the dilutive effects of the transaction on existing shareholders' rights, we recommend approval

Underlying
Banco Santander

Banco Santander is a holding company, providing a range of financial products. Co.'s products and services include: retail banking business that covers all customer banking businesses; wholesale banking business; as well as asset management and insurance business. Co.'s principal operations are in Spain, the U.K., Portugal, Germany, Italy and Latin America. As of Dec 31 2014, Co.'s total assets amounted to Euro1,266,296,000,000 and total customer deposits amounted to Euro647,627,000,000.

Provider
Proxinvest
Proxinvest

Founded in 1995, Proxinvest is an independent proxy firm supporting the engagement and proxy analysis processes of investors. Proxinvest mission is to analyse corporate governance practices and resolutions proposed at general meetings of listed firms.

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Expert Corporate Governance Service (ECGS)

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