Santander Consumer USA Holdings Inc. (SC) announced that it received a $39 per share cash acquisition bid for all of its remaining shares from Santander Holdings USA, Inc. (“SHUSA”). Shares of the consumer financing services provider soared 11.3% to close above the bid price at $40.56 on July 2.
SHUSA is already the majority shareholder of SC, owning around 80% of the company’s outstanding shares, and believes that the bid reflects an attractive value to SC’s public shareholders.
The purchase price implies a 7.4% premium to the closing price of $36.32 of June 30 and also reflects a 30.4% premium to SC’s average share price since January 1, 2021. (See Santander Consumer USA stock chart on TipRanks)
The proposal is subject to the approval of the SC Board and recommendations made by a Special Committee comprising of independent and disinterested directors.
SHUSA also stated that the proposal is non-binding and that it will not engage in the voting matters of any alternative sale, merger, or similar transaction involving SC.
Following the news, Compass Point analyst Giuliano Bologna downgraded the stock to a Hold from a Buy. Bologna lifted the price target to $39 (from $35) to match the acquisition price.
Based on 6 Buys versus 6 Holds, the stock has a Moderate Buy consensus rating. The average Santander Consumer USA price target of $35.83 implies 11.7% downside potential to current levels. Shares have gained 113% over the past year.
According to TipRanks’ Smart Score system, SC gets a 5 out of 10, which indicates that the stock is likely to perform in line with market averages.
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