Santander to Purchase 51% Stake in Corte Ingles Financing Unit
Banco Santander (SAN) SA, Spain’s biggest bank, agreed to buy 51% of the finance unit of El Corte Ingles, the country’s largest retailer, for about 140 million euros ($190 million) to expand domestic lending.
El Corte Ingles also will get an extraordinary dividend of 140 million euros from the unit before the deal closes, the Santander, Spain-based bank, said in a regulatory filing today. The two payments value the entire unit at 415 million euros and the transaction will probably close in the first quarter of next year, the bank said.
Santander is buying control of a unit financing purchases by holders of 10.5 million El Corte Ingles store cards as a five-year slump bottoms out and the government forecasts Spain’s economy will be growing from the end of this year. Chief Executive Officer Javier Marin said in a presentation in London last month that Santander anticipates an economic turnaround and a 3 billion-euro profit swing in Spain by 2016.
El Corte Ingles said in May it was “re-organizing” about 5 billion euros of debt. In August, the company, which runs 86 department stores in Spain and Portugal and employs about 97,000 people, said profit fell 18 percent in 2012 as Spain’s economic slump sent retail sales volume plunging.
The finance unit lent 6.7 billion euros to customers in 2012, a 9.5 percent decline on the previous year, according to the retailer’s annual report.
The business earned 43 million euros on revenue of 168.4 million euros last year, according to El Corte Ingles. Buying the stake in the financing unit helps Santander add to its 171 billion-euro lending business in Spain.
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