PHILADELPHIA and BROOKLYN, N.Y., Oct. 24 /PRNewswire-FirstCall/ --
Sovereign Bancorp, Inc. ("Sovereign") (NYSE: SOV), parent company of Sovereign
Bank, announced today that it has reached an agreement with Grupo Santander,
the 9th largest bank in the world as ranked by market capitalization, whereby
the Madrid, Spain-based banking group will become Sovereign's financial
partner and largest shareholder through the purchase of approximately 90
million shares for $2.4 billion in cash at a purchase price of $27 per share.
Simultaneously, Sovereign and Independence Community Bank Corp.
("Independence") (Nasdaq: ICBC), announced they have reached a definitive
agreement for Sovereign to acquire 100% of Independence Community Bank Corp.
of Brooklyn, New York, for $42 per share in cash, representing an aggregate
transaction value of $3.6 billion. The price represents about 15.6 times 2006
analyst mean earnings estimates and 1.58 times book value. Sovereign expects
the transaction to be over 2% accretive to GAAP earnings and over 3% accretive
to operating/cash earnings in 2007. This gives Sovereign the No. 9 deposit
market share in the very attractive Metro New York Market.
Independence has $18.5 billion in assets and is a leading community bank
and a multifamily lender in the Metro New York area. The combined company,
with over $80 billion in assets, solidifies Sovereign's position among the top
10 banks in the northeastern United States and the top 20 banks in the entire
country.
"We are very pleased to welcome Santander as a major shareholder and look
forward to a long and very profitable relationship benefiting all our
shareholders, customers, team members and communities that we serve. This
partnership is, of course, facilitating Sovereign's accretive acquisition of
Independence that increases our franchise value and meets all our capital
allocation discipline, providing an IRR in excess of 15%, well above our cost
of capital," stated Jay Sidhu, Sovereign Bancorp's Chairman, President and
Chief Executive Officer. "Santander's global strength and Sovereign's local
expertise in the northeast United States are what makes this partnership so
valuable."
The Santander agreement includes the following:
-- Santander is purchasing this stake at a premium of 23.8% to the 20-day
average price of Sovereign stock.
-- Santander will have the opportunity to increase its ownership stake to
24.9% from 19.8%, upon the satisfaction of certain conditions by
buying additional shares of Sovereign stock, either on the open market
or directly from Sovereign.
-- Sovereign and Santander will have the right to negotiate an
acquisition of 100% of Sovereign after two years at a minimum price of
$40 per share for a twelve-month period and at market driven prices
over the subsequent twenty-four months.
-- Grupo Santander will appoint two new members to Sovereign's board of
directors and Sovereign's CEO will serve on Grupo Santander's board.
"By partnering with Santander, we have enhanced our organization for our
customers, team members and the citizens of our communities for years to come,
while continuing to create above-average shareholder value. This transaction
provides Santander an opportunity to increase its investments in financial
institutions and enter the United States by establishing a partnership with
Sovereign and Independence," said Sidhu.
Sidhu will continue to be Chairman, President and CEO of Sovereign
Bancorp. Alan Fishman, currently President and CEO of Independence, will
become President and COO of Sovereign Bank and Chairman and CEO of the Metro
New York Market. In addition, one of Independence's outside directors is
expected to join Sovereign's board.
Fishman said, "Sovereign is an outstanding partner for our employees,
customers and communities. They share our vision of unmatched customer
service. With Sovereign's and Santander's support, this partnership will
provide greater resources to expand our presence in our key markets and
enhance our growth and profitability using our proven successful business
model."
"The acquisition of Independence is a logical next step, as it allows us
to enter the last large market within our northeastern footprint where we did
not previously have a presence," said Sidhu. "As the No. 9 bank in the New
York metro market, we will be a leader in the most dynamic banking market in
the United States. Our strengths, in consumer and commercial banking, can
only add to the compelling franchise Independence has built and add to our
revenue stream. We expect to execute long-term contractual relationships with
the senior management of Independence to motivate them to continue to build
the company profitably," Sidhu concluded.
The acquisition of Independence is subject to approval by Independence's
shareholders. Both transactions are also subject to approval by various
regulatory authorities, and are expected to close on or about July 1, 2006.
Citigroup Corporate and Investment Banking acted as principal financial
advisor to Sovereign. Sovereign used two additional financial advisors, Bear,
Stearns & Co. Inc. and JP Morgan Securities, Inc., to provide advice on
certain other aspects. Stevens & Lee acted as legal advisor.
Merrill Lynch & Co. was financial advisor and provided a fairness opinion
to Independence. Lehman Bros. provided a fairness opinion to Independence.
Simpson Thacher & Bartlett LLP acted as legal advisor.
Interested parties may participate via conference call at 9 a.m. ET by
dialing 800-464-9103 or via webcast at http://www.sovereignbank.com, Investor
Relations, Conference Call & Webcasts, or
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-
eventDetails&c=67999&eventID=1153707. A telephonic replay will be available
starting at 11:00 am ET on October 25, by dialing 800-642-1687, conference id#
1853067; the webcast replay will be available at the same time. Interested
parties may also access a PowerPoint presentation on Sovereign's web site at
8:00 a.m. ET on Tuesday, October 25, by visiting http://www.sovereignbank.com,
Investor Relations, News and Press, Presentations.
Sovereign Bancorp, Inc., ("Sovereign") (NYSE: SOV), is the parent company
of Sovereign Bank, a $60 billion financial institution with more than 650
community banking offices, over 1,000 ATMs and approximately 10,000 team
members with principal markets in the Northeast United States. Sovereign
offers a broad array of financial services and products including retail
banking, business and corporate banking, cash management, capital markets,
trust and wealth management and insurance. Sovereign is the 19th largest
banking institution in the United States. For more information on Sovereign
Bank, visit http://www.sovereignbank.com or call 1-877-SOV-BANK.
Santander (SAN.MC, STD.N) is the 9th largest bank in the world by market
capitalization and the largest in the Euro Zone. Founded in 1857, Santander
has 63 million customers, 10,099 offices and a presence in over 40 countries.
It is the largest financial group in Spain and Latin America, and is a major
player elsewhere in Europe, including the United Kingdom through its Abbey
subsidiary and Portugal, where it is the third largest banking group. Through
Santander Consumer it also operates a leading consumer finance franchise in
Germany, Italy, Spain and nine other European countries. In 2004, Santander
recorded 3.6 billion euro in net attributable profits. In Latin America,
Santander manages over US$130 billion in business volumes (loans, deposits and
off-balance sheet assets under management) through 4,100 offices in 10
countries.
Independence Community Bank Corp. is the holding company for Independence
Community Bank. The Bank, originally chartered in 1850, currently operates
123 branches located in the greater New York City metropolitan area, which
includes the five boroughs of New York City, Nassau and Suffolk Counties and
New Jersey. At its banking offices located on Staten Island, the Bank
conducts business as SI Bank & Trust, a division of Independence Community
Bank. The Bank has three key business divisions, Commercial Real Estate
Lending, Consumer Banking and Business Banking, and actively targets small and
mid-size businesses. The Bank maintains its community orientation by offering
its diverse communities a wide range of financial products and by emphasizing
customer service, superior value and convenience. The Bank's web address is
http://www.myindependence.com.
Note:
This press release contains financial information determined by methods
other than in accordance with U.S. Generally Accepted Accounting Principles
("GAAP"). Sovereign's management uses the non-GAAP measure of operating/cash
earnings, and the related per share amount, in their analysis of the company's
performance. This measure, as used by Sovereign, adjusts net income
determined in accordance with GAAP to exclude the effects of special items,
including significant gains or losses that are unusual in nature or are
associated with acquiring and integrating businesses, and certain non-cash
charges. Cash earnings represent net income adjusted for the after-tax
effects of merger-related and integration charges, certain restructuring
charges and the amortization of intangible assets. Since certain of these
items and their impact on Sovereign's performance are difficult to predict,
management believes presentations of financial measures excluding the impact
of these items provide useful supplemental information in evaluating the
operating results of Sovereign's core businesses. These disclosures should
not be viewed as a substitute for net income determined in accordance with
GAAP, nor are they necessarily comparable to non-GAAP performance measures
that may be presented by other companies.
This press release contains statements of Sovereign's strategies, plans,
and objectives, as well as estimates of future operating results for 2005 and
future periods for Sovereign Bancorp, Inc. as well as estimates of financial
condition, operating and cash efficiencies and revenue generation. These
statements and estimates constitute forward-looking statements (within the
meaning of the Private Securities Litigation Reform Act of 1995), which
involve significant risks and uncertainties. Actual results may differ
materially from the results discussed in these forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
general economic conditions, changes in interest rates, deposit flows, loan
demand, real estate values and competition; changes in accounting principles,
policies, or guidelines; changes in legislation or regulation; Sovereign's
ability in connection with any acquisition to complete such acquisition and to
successfully integrate assets, liabilities, customers, systems and management
personnel Sovereign acquires into its operations and to realize expected cost
savings and revenue enhancements within expected time frame; the possibility
that expected one time merger-related charges are materially greater than
forecasted or that final purchase price allocations based on the fair value of
acquired assets and liabilities and related adjustments to yield and/or
amortization of the acquired assets and liabilities at any acquisition date
are materially different from those forecasted; other economic, competitive,
governmental, regulatory, and technological factors affecting the Company's
operations, integrations, pricing, products and services; acts of terrorism or
domestic or foreign military conflicts; and acts of God, including natural
disasters.
Sovereign Bancorp is followed by several market analysts. Please note
that any opinions, estimates, forecasts, or predictions regarding Sovereign
Bancorp's performance or recommendations regarding Sovereign's securities made
by these analysts are theirs alone and do not represent opinions, estimates,
forecasts, predictions or recommendations of Sovereign Bancorp or its
management. Sovereign Bancorp does not by its reference to any analyst
opinions, estimates, forecasts regarding Sovereign's performance or
recommendations regarding Sovereign's securities imply Sovereign's endorsement
of or concurrence with such information, conclusions or recommendations.
SOURCE Sovereign Bancorp, Inc.
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Related links:
http://www.sovereignbank.com
CONTACT:
FINANCIAL CONTACTS: Mark McCollom,
+1-610-208-6426, mmccollo@sovereignbank.com, or Stacey Weikel,
+1-610-208-6112, sweikel@sovereignbank.com, both of Sovereign
Bancorp; MEDIA CONTACT: Ed Shultz of Sovereign Bancorp,
+1-610-378-6159, eshultz1@sovereignbank.com, or Michael Armstrong
of Independence Community Bank Corp., +1-718-722-5348,
marmstrong@icbny.com
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