By Brazil Stock Guide — Spain’s Banco Santander announced on Thursday (November 12) a 5% increase in the share exchange ratio offered to acquire the approximately 10% stake it does not already own in Santander Brasil (B3: SANB11). The transaction, valued at up to €1.9 billion, now implies an 8.4% premium for minority shareholders over the Brazilian bank’s closing share price on Wednesday (November 11).
Calculations by Brazil Stock Guide, based on November 11 closing prices, indicate that the revised offer values each Santander Brasil unit — a security combining one common and one preferred share — at approximately R$29.69, compared with its previous closing price of R$27.40. The estimate is based on Santander’s Madrid-listed shares closing at €11.294, an exchange rate of R$6.1912 per euro, and the revised exchange ratio of 0.4246 Spanish parent shares for each Brazilian unit, adjusted for dividends paid since July.
The implied premium is below the 15% calculated by Santander when it first announced the transaction on July 30, based on market prices at that time. The comparison suggests that, despite the improved terms, the gap between the offer’s implied value and Santander Brasil’s market price has narrowed. The two figures, however, reflect different market conditions rather than a reduction in the number of shares being offered.
Under the revised terms, each Santander Brasil unit or American Depositary Share (ADS) will be exchanged for 0.4260 newly issued Banco Santander shares, before dividend adjustments, up from 0.4056 under the original proposal. For individual common or preferred shares, the exchange ratio has increased to 0.2130 from 0.2028. After accounting for distributions already made, the effective ratios would be 0.4246 per unit, 0.2124 per common share and 0.2122 per preferred share.
The consideration will consist entirely of newly issued shares in the Spanish parent rather than cash. Brazilian investors will receive Brazilian Depositary Receipts (BDRs), which can be traded on Brazil’s B3 stock exchange. As a result, the amount ultimately received by minority shareholders will remain exposed to movements in Santander’s share price and the euro-real exchange rate until the transaction is completed, as well as any adjustments предусмотрed under the offer documentation.
If all eligible minority shareholders accept the proposal, Banco Santander will issue approximately 166 million new shares, equivalent to 1.1% of its current share capital. The original offer, announced in July, envisaged issuing around 156 million shares. Despite the increase in the number of shares to be issued, the transaction’s maximum estimated value remains close to €1.9 billion.
Lower Expected Returns for the Parent Company
The improved offer terms also come with a reduction in the financial benefits projected for shareholders of the Spanish parent. In July, Santander estimated that acquiring the remaining minority stake in its Brazilian subsidiary would increase group earnings per share by approximately 0.5% from 2028. Under the revised terms, the expected increase has fallen to 0.3%, with the benefit now projected to materialize only from 2029.
Santander has maintained its forecast for an approximately 0.6% increase in tangible book value per share. According to the bank, the transaction will remain neutral to the group’s regulatory capital ratios and is expected to support long-term earnings growth and organic capital generation.
The decision to improve the offer follows an approximately 10% increase in Santander Brasil’s share price, adjusted for dividends, since the original announcement, according to information released on Thursday. The Spanish banking group said the revision reflected recent market developments and feedback from stakeholders, without disclosing details of any discussions with minority shareholders.
The move also comes as the Brazilian subsidiary faces pressure on profitability. Santander Brasil’s third-quarter 2026 net income fell 15% from a year earlier, while loan-loss provisions rose 23%, reflecting the impact of deteriorating credit quality and higher credit costs on the bank’s earnings.
The offer is part of Santander’s broader strategy to simplify its corporate structure and increase ownership of its international subsidiaries. When the transaction was first announced, the group said it did not intend to delist Santander Brasil from B3. Participation in the exchange offer will be voluntary, with no minimum acceptance threshold.
Santander plans to seek approval from its shareholders for the capital increases required to complete the transaction at an extraordinary general meeting scheduled for December 15. The formal launch and completion of the offer remain subject to regulatory approvals and other customary conditions.
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