 "Sovereign Bancorp's financial struggles could eliminate what was once seen as inevitable: The sale of the Philadelphia company to Spain's largest bank, Banco Santander Central Hispano.
Sovereign's stock price - which has plummeted in the last year from as high as $26.70 per share to a low of $8.71 last month before settling in this month at roughly $12 - comes with a volatile lending portfolio and little capital cushion.
Analysts now find it hard to imagine a scenario in which Sovereign is sold in the next year, given the market and the returns. It is now believed that based on activity in the market, Santander is unlikely to buy Sovereign, especially at the agreed price of $40 per share which now appears an unreasonable figure. However, there are few options open to Sovereign, after all Santander can match any other bid.
Banco Santander owns 25 per cent of Sovereign after completing a complicated, controversial three-way deal in 2006. Sovereign CEO at the time, Jay Sidhu, fought off a challenge from activist institutional investor Relational Investors, which complained about the bank's stock price for over a year, allowing Santander to buy almost 20 per cent of the bank for $2.4 billion, with the Spanish bank exercising its option to move its ownership up to 25 per cent after the deal. " |
