CNP Assurances (CNP) SA agreed to buy 51 percent of Banco Santander SA (SAN)’s consumer-finance insurance units, a deal that gives the French insurer access to a host of European countries including Germany.
CNP Assurances will pay about 290 million euros ($395 million) for the majority stake in Santander’s consumer-finance insurance assets, the Paris-based company said in a statement today. The French insurer also agreed to become Santander Consumer Finance’s exclusive long-term partner to distribute life insurance products to 12 million clients, it said.
CNP already has operations in Italy, Spain and Portugal. The deal will give it an instant presence in Germany, Europe’s leading economic, as well as Poland, Austria and Nordic countries including Sweden and Denmark.
With the purchase, expected to close this year, CNP will get “immediate scale in several European markets with strong fundamentals,” the insurer said. Santander Consumer Finance’s insurance units in 2013 had revenue of almost 600 million euros and “the activity presents a strong potential, both in terms of margins and growth,” it said.
Nuria Alvarez, an analyst at Spanish bank Renta 4 in Madrid, said the operation makes sense for both Santander and CNP. “For Santander it is a way to diversify its business, grow in the insurance area by getting the knowhow of CNP and also growing in countries where it does not have a large presence, such as France,” Alvarez said by telephone.
The transaction’s financial terms may change “upwards or downwards” depending on performance in the next years, CNP said, without providing further details. CNP will finance the deal “from existing resources,” according to the statement.
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