Spain's SCH to buy Abbey National
(CNN) -- Spain's largest bank, Santander Central Hispano, is buying Abbey National, Britain's sixth-largest bank and second-largest mortgage lender, for an estimated £8.25 billion ($15.1 billion).
Santander and Abbey confirmed the deal Monday after news reports of the takeover emerged Friday.
"Abbey National plc confirms that it has reached agreement with Banco Santander on the terms of a recommended cash and shares offer to be made for the whole of its ordinary share capital," the London-based bank said in a statement released to the London Stock Exchange.
If successful, the takeover would create the world's eighth-largest bank by market value and fourth-largest in the 12-country euro zone.
Abbey shares were down 5.3 percent at 548-1/4 pence in mid-morning trading Monday in London.
Abbey's share price has fluctuated widely in recent months amid takeover rumors.
Santander shares were suspended at 8 euros on Friday.
"This is the first big cross-border deal in Europe and it's going to be eagerly watched," Peter Thorne, an analyst at at private bank Pictet, told Reuters.
Earlier this year, Santander made what British media described as an "informal approach" to Abbey National. No pricing details were given at the time.
With a market capitalization of £7.2 billion ($13.2 billion), Abbey is the UK's sixth-largest bank. Its shares closed 15.6 percent higher Friday at 570 pence ($10.49) on the LSE.
The group has cut jobs, sold non core assets and reorganized its operations in a three-year overhaul designed to reverse two years of heavy losses.
It has insisted it would return to the black in the current financial year after losses hit £686 million ($1.2 billion) in 2003 and £947 million ($1.7 billion) the year before.
Three years ago, domestic rival Lloyds TSB made a bid for Abbey, but was blocked by regulators because the combined bank's dominance would have violated competition rules.
Since then, Royal Bank of Scotland executives have said they would like to buy Abbey but didn't believe regulators would permit the takeover.
Bank of Ireland and National Australia Bank also tried to buy Abbey in 2002.
Santander has retail banking operations in Spain as well as in other European countries and in Latin America, where its subsidiaries make it the top banking group. The subsidiaries include Banco Santander-Chile, Banco Rio de la Plata in Argentina and Grupo Financiero Santander Mexicano. The bank has more than 100,000 employees worldwide.
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Associated Press contributed to this report.
