DealZone

from Breakingviews:

Santander could beat BBVA to the American dream

Spain's two largest banks have always been fiercely competitive -- both within the country's borders and beyond. The battleground today is the United States. But, Santander and BBVA are following radically different strategies to crack this giant market.

It's too soon to tell who will come out on top, and neither lender has covered itself in glory so far. But, if Santander's talks with Buffalo-based M&T Bank lead to a deal, it will be much closer than BBVA to clinching its American dream.

BBVA's U.S. adventure began in 2004 with the takeover of Laredo National for $850 million, or nearly three-times book value. The idea was to exploit trade flows between BBVA's strong Mexican franchise and Hispanics across the border.

Since then, BBVA has added four more banks. That includes spending $9.6bn, or 3.5-times book, for Alabama's Compass Bancshares in 2007, only to see the market tank. BBVA wrote-off 704 million euros in goodwill on its U.S. franchise at the end of 2009.

By contrast, Santander has targeted the more affluent northeast coast. Its U.S. foray began badly in 2006, after it controversially bought a pricey 20 percent stake in Sovereign Bancorp. A $1.08 billion (737 million euros) charge followed when recession hit. True, Santander bagged the rest of the bank for a knock-down price, but only after it had injected another $347 million in 2008 in Sovereign's last-ditch capital hike.

from Alexander Smith:

Santander wins with Brazil float

    Buying ABN AMRO may have bankrupted Royal Bank of Scotland and Fortis, but it has proved another coup for Spain's Santander whose chairman Emilio Botin has shown his eye for a bargain.
    After flipping Italy's Banca Antonveneta for an impressive profit before the ink was even dry on the contract to take it over from ABN, Botin is now looking to float Banco Santander Brasil, including another former ABN asset, Banco Real, once part of the Dutch bank's Latin American empire.
    With Brazilian valuations riding high and the IPO market flourishing, Citigroup reckons BSB could be worth as much as $30 billion. If so, the partial sale would again demonstrate Botin's ability to spot a good deal.
    Brazil is far too important to Santander -- it accounted for 18 percent of the bank's first half profits of 4.5 billion euros -- for Botin to give up control. But a flotation of 15 percent of the Brazilian bank could raise $4.5 billion of scarce capital while giving Botin another currency for shopping in South America. lt is already Brazil's third-largest bank by assets.
    Santander has been able to keep buying through the financial crisis, becoming the biggest bank in the euro zone as a result. Botin has also picked up Sovereign Bancorp in the U.S. and Alliance & Leicester, along with the remains of failed former building society Bradford & Bingley, in Britain.
    Floating the Brazilian business would crystallise its value. It might also boost Santander's own share price, but risks investors taking the view that a global roll-out of the bank's name and brand means the parent is becoming a conglomerate rather than an integrated group.
    The possibility of attracting a conglomerate discount won't have escaped Botin, whose family still owns nearly 2.5 percent of the $115 billion bank.
    Unlike his colleagues in the banks which have failed, Botin has his family fortune tied up in the business he runs. This, surely, is a powerful reason why Santander has avoided plunging into areas where the risk was far greater than the executives knew or cared. The bank has the strength to take advantage of the fashion for things Brazilian, and he can reflect that the acquisition which sunk RBS has done him no harm at all.

from Global Investing:

Careful what you say

Bank executives beware. Turn your microphones off during what are likely to be stormy shareholder meetings this year.

Insults are likely to fly at many bank AGMs this year from shareholders angry at their board for losing billions, sending shares crashing, making ill-advised purchases or for their role in the global economic crisis. Bankers are unpopular after more than a year of grim news.

But an unnamed director at Santander lacked humility this week.  After heated questions from the floor about the Spanish bank's purchase of U.S. lender Sovereign and its exposure to the alleged Bernie Madoff fraud, some shareholders applauded a critical comment.

West Coast Care

CVS CaremarkCVS Caremark Corp is bolstering its position on the West Coast with its acquisition of rival Longs Drugs Stores Corp. The deal, announced on Tuesday, is worth $2.54 billion and will allow CVS to expand in states like California and broaden the reach of its prescription services. The acquisition of Longs’ 521 stores will also give CVS a leading position in Hawaii, where it doesn’t operate. CVS will pay $71.50 per share for Longs, including its Rx America subsidiary, a prescription benefits management services company with over 8 million members. Longs shares closed at $54.04 before the news on Tuesday, but surged nearly 30 percent in extended trading on the deal. Shares in CVS fell nearly 7 percent on the news.
GM chief Rick Wagoner says there’s significant interest in the auto maker’s planned sale of up to $4 billion of assets as it battles record losses and falling sales, but no deals are expected soon. General Motors Corp is struggling against an accelerating downturn in its home market and high oil prices that have hammered sales of its trucks and SUVs, triggering a $15.5 billion quarterly loss, the third-largest in its 100-year history. Earlier this month, sources told Reuters GM was in talks with India’s Mahindra & Mahindara Ltd and automakers in Russia and China about selling its Hummer brand.

A consortium led by Goldman Sachs Group Inc has agreed to pay about $1.5 billion for a number of ABN AMRO’s private equity assets, the Wall Street Journal said Wednesday. On Monday, Belgian-Dutch financial services group Fortis said that together with Britain’s Royal Bank of Scotland Group and Spain’s Banco Santander, it had sold a number of ABN AMRO private equity assets to a Goldman Sachs-led consortium. The Journal said Goldman’s investment comprised 32 European companies as well as roughly $450 million in capital to be invested in future deals.
Other deals of the day:

* Australia’s CSL Ltd, the world’s top maker of blood plasma products, is buying smaller U.S. rival Talecris Biotherapeutics Holdings Corp for $3.1 billion, to boost its presence in the fast-growing biopharmaceutical industry.

This Bud’s for you

bud.jpgU.S. brewer Anheuser-Busch accepted a hopped-up $52 billion takeover bid from Belgium-based InBev. InBev agreed to pay $70 per share for the maker of Budweiser, up from its original unsolicited bid of $65 per share, both companies said on Monday. The improved offer marked a 27 percent premium to Anheuser’s record-high stock price in October 2002. The deal is expected to gain regulatory approval. It would be the largest in the industry and the third-biggest ever foreign takeover of a U.S. company. Now, let the naming begin. While not nearly as bouncy as Microhoo, the union does lend itself to some intriguing combinations. The company seems to be settling on Anheuser-Busch Inbev. ABI Brewing, or ABIB, could suggest beer drinkers need to protect their shirts. The company could certainly be forgiven for seeking something more mouth friendly. Some DealZone suggestions from reporters who have spent far too much time thinking about it: InBusch, AmBusch, InBever-Busch, AmBever, BudBev or BevBud, lending itself to BevBuddies and BuddyBev.

Spain’s Santander is buying British bank Alliance & Leicester for 1.3 billion pounds ($2.6 billion) in an agreed deal that will bulk up its existing UK bank Abbey. Santander, Europe’s second-biggest bank after HSBC, has long been considered a potential buyer of A&L, but has been able to secure a knockdown price after a collapse in its target’s share price in the past year. Santander said it was offering 1 of its shares for every three A&L shares, plus a cash dividend of 18 pence per share. The deal values A&L stock at 317p, compared with a 12-month high of 1,170 pence. A&L shares soared 54 percent to 338 pence by 1000 GMT after Santander confirmed the deal, reflecting the prospect that a takeover battle could ensue.

GlaxoSmithKline could pay Swiss company Actelion up to 3.3 billion Swiss francs ($3.28 billion) to develop a promising insomnia drug in the largest biotech partnering deal. Glaxo, Europe’s biggest drugmaker, beat many of the world’s top pharmaceuticals companies to partner Actelion’s sleeping pill almorexant and the deal sent the Swiss biotech’s stock soaring nearly 10 percent. “The deal terms already allow significant value to be transferred to shareholders,” said Landsbanki Kepler analyst Denise Anderson. Glaxo, which like other big drugmakers is keen to snap up promising new medicines to bolster its pipeline, had been tipped as a likely partner for almorexant, currently in late-stage clinical development. But some analysts had questioned whether it would go for the deal as it has the only other similar drug in clinical development, on hold in mid-stage trials.