Sovereign Bank (SOV)
I continue to look for a good bank play and came across SOV. Though their stock has stagnated in the low $20s for the past three years, they acquired Independence Community Bank in NY last year when Spanish banking conglomerate, Grupo Santander purchased 24% of SOV's shares. Under the agreement of purchase, Grupo Santander can purchase the rest of SOV’s shares on the open market in two years (mid 2008) at $40 / share.
Two more financials that look great and wished I was in on many months ago...
FMD - I wonder if First Marblehead is growing toward the end of its great growth cycle that has tripled it value over the last year. Up 203.14% ytd.
GRAN - Bank of Granite just split 1 for 4. Up 13.57% ytd.
At Sov's annual meeting, the not too well liked, President of Sovereign, Jay S. Sidhu, talked about Grupo Santander's involvement with SOV and said he would like to see SOV acquired. He mentioned the agreement the two banks have entered into which stipulates that, with certain exceptions, for five years from the initial investment, Santander will not raise its stake above 24.99% nor sell it to third parties. Two years from the initial investment, Santander can offer to acquire 100% of SOV, according to a procedure set forth in the agreement at $40 /share, or maintain its stake. After five years, Santander may divest the stake. Under the agreement, Santander’s voting rights in SOV will be limited to 19.99%, unless Santander acquires 100% of SOV or SOV's non-Santander shareholders vote to allow Santander to vote all of its shares.
Last week news came that the board of directors may can Jay Sidhu and now Banco Santander is reviewing whether they should buyout the rest of Sovereign. Originally they agreed to a buyout of Sovereign at $40.00 a share in mid 2008. But maybe all of this news is hastening the aquisition.
Anybody hear anything about this topic?
The forum messages for SOV at Yahoo Finance are very interesting. They lead me to believe while the likelihood of a buyout is coming, shareholders feel trapped by Santander wanting Sidhu too continue on which will likely depress the buyout price everyone is awaiting.