U.S. – SEC Santander Tender Offer Relief

U.S. – SEC Santander Tender Offer Relief

On 9 August 2019, SEC issued cross-border tender relief to Banco Santander.

  • Response to 7 August 2019, letter from Banco Santander Spanish bank and subsidiaries.
  • Subsidiaries are based in US, EU, LatAm including Banco Santander Mexico (San Mex).
  • Santander seeking to acquire outstanding shares in Santander Mex via a tender offer.
  • Acquisition is structured as dual exchange offer: one in US, other in Mexico exchange.

Relief Sought

  • Santander seeking application of Tier II relief pursuant to Rule 14d-1(d)(2) and Rule 14e-5(b)(11), so its dual exchange offers are exempt from certain SEC Rules.
  • Rule 14e-1(c) requires payment of securities in tender offer be made promptly.
  • Due to Spain registration rules, payment of securities to US holders would exceed the normal settlement periods applicable to stock exchange transactions in US.
  • Rule 14d-10 requires equity tender offer be open to all security holders of class.
  • As Mexico offer rules, like documentation, differ from US, not same offer open to all.
  • Rule 14e-5 allows offeror purchases subject to tender offer pursuant such offer only.
  • Dual exchange offer takes purchase of securities outside of scope of the US offer.

Tier II Relief

  • Rules exemption for cross border tender offer if US holders own 40% or less securities offered (not counting ones offeror holds), and complies other US laws (Tier II relief).
  • Santander offers meet Tier II relief requirements except for US ownership limitation.
  • More than 47% of San Mex securities not owned by Santander owned by US holders.

Relief Granted

  • US offer settlement will happen no later than sixth business day after end offer period.
  • US offer open to all holders of San Mex American depositary and all US holders of San Mex shares, and separate Mexico offer open to all San Mex holders wherever located.
  • Santander may purchase securities tendered in Mexican offer during the US offer.

Relief Rationale

  • Granted relief due to conflicts of law and facts set forth in letter; precedent for relief.