Pastor main shareholders to accept Popular takeover

Banco Popular said Monday it had received acceptances for its 1.35-billion takeover offer from Banco Pastor, representing 52.3 percent of the bank's capital.

The offer is conditional on the receipt of acceptances from shareholders representing at least 75 percent of the Galicia-based Pastor's share capital, Popular said Monday.

Popular launched its all-share offer for its smaller rival on Friday. Pastor shareholders will receive 1.115 new Popular shares for every one they hold, while convertible bondholders will get 30.9 new shares for each of their bonds. To cover the swap, Popular will issue 378 million new shares.

The offer values Pastor at 3.975 euros per share, a premium of 31.2 percent to the latest Pastor share price. After resuming trading on Monday, Pastor's share price closed up 21.05 percent at 3.68 euros, while Popular ended up 0.98 percent at 3.60 euros.

Popular said it expects the takeover process to be completed in the first quarter of next year. Founded in 1776, Pastor is Spain's second-oldest bank.

The shareholders that have already indicated their acceptance of Popular's bid include the Pedro Barrié de la Maza Foundation, which is controlled by the Arias family and is Pastor's biggest shareholder with a 42.2-percent stake. Spanish billionaire Amancio Ortega, who is the leading shareholder in fashion retail giant Inditex, will also tender his stake. Popular has received acceptances from holders of 29.4 percent of the convertible bonds it is also looking to buy.

At a presentation of the offer, Popular said it would issue 700 million euros in bonds that holders will be obliged to convert into shares. The issue will be used to restore the bank's core capital ratio to 9.7 percent. The offer for Pastor will shave 68 basis points off its solvency ratio.

Popular also announced it would be making provisions for loan losses of 1.1 billion after tax. The injection in its balance sheet will raise Popular's coverage for non-performing loans from 47 percent to 54 percent, Chairman Ángel Ron said at the presentation.

Popular said the 31-percent premium it is offering to acquire Pastor is 2.5 times covered by the 799 million euros in synergies it expects to generate from the merger. It expects cost savings from the deal of 74 million euros in 2012, 133 million the following year and 147.2 million annually from the third year. The merge will cost 209 million euros to implement next year and 113 million the following year. Ron said job cuts would be carried out in a "civilized" manner, such as voluntary early retirement.

Without counting restructuring costs, the acquisition of Pastor will add 1 percent to Popular's earnings per share in 2012 and more than 3 percent in 2013 and 2014.

Ron said Popular had been working on the deal for more than a year, and denied the Bank of Spain was behind it. The merger will reinforce Popular's position as Spain's fifth-biggest lender after Santander, BBVA, Bankia and La Caixa and make it the second biggest in Galicia after Novacaixagalicia, which has been nationalized.

Ron said Popular may sell part of Pastor's branch network to France's Crédit Mutuel, with whom the Spanish bank last year set up a 50:50 joint venture.