Stockholm (Dow Jones Newswires) Danske Bank A/S (DANSKE.KO), the second-largest bank in the Nordic region, Thursday signed an agreement to buy the banking operations of Finnish financial services group Sampo Oyj (SAMAS.HE) for DKK30.1 billion ($5.15 billion).
The transaction, the biggest ever acquisition ever by the Danish bank, will add 125 branches and 3,475 staff to Danske Bank in Finland, as well as 33 branches and 1,100 employes in Estonia, Latvia and Lithuania. It also includes a newly acquired bank in Russia.
The deal doesnt include Sampos life and non-life insurance operations.
At 0829 GMT, Danske Bank shares were down DKK10.50, or 4%, to DKK252.50 in a lower Copenhagen market.
Sampo shares were up EUR1.95, or 11.1%, to EUR19.60 in a higher Helsinki market.
"Were getting access to both Finland and the Baltics," Danske Bank Chief Financial Officer Tonny Andersen told Dow Jones Newswires. "Finland is an area in the Nordics where we havent been visible, and by moving into Finland, and also the Baltic countries, this way we get a critical mass."
Hannu Vuola, Sampos head of corporate communications, said that talks between the two companies have been going on since October and that the reason for the sale of Sampo Bank was the price.
"We though it was good price and that our shareholders will profit from it," he said.
In connection with the purchase, the Danske Bank Group plans to issue new shares, which are expected to provide proceeds of up to DKK14 billion. The remaining purchase amount will be funded through the issue of tier 1 hybrid capital, subordinated debt and through other liquidity sources.
Danske Bank Chief Executive Peter Straarup said in a statement that the investment in Finland is in line with Danske Banks strategy of expanding its retail banking activities in Northern Europe.
"Our joint banking concept -- the Danske Banking Concept -- provides a sound platform for expansion," he said. "Sampo Bank is attractive because its retail banking profile and structure match ours and support our strategy of further geographical and risk diversification.
"Another advantage is that economic growth in Finland and in Estonia, Latvia and Lithuania exceeds the European Union average," he added. "That provides an excellent basis for continuing growth."
An analyst, who asked not to be named, said the buy was a good move for both parties. The price was at the high-end, he said, but "Danske is known to be very smart, so from a capital perspective, and in terms of synergies, I think theyve calculated this."
Martin Gottlob, Danske Bank head of investor relations, said that the buy is roughly around 20% of Danske Banks market capitalization. It will remain the second-largest player in the Nordics after Nordea Bank AB (NDA.SK) in terms of market capitalization, he said, "but measured against assets I think we might become number one."
Karl Morris, analyst at Keefe, Bruyette and Woods, said that the size of Sampo group after the transaction will depend on what the group decides to do with its excess capital.
"Theres not that much information at the moment, so well have to wait until they tell us more," he said.
In a separate release after the release of its third-quarter results earlier Thursday, Sampo said it aims to distribute an annual dividend corresponding to a dividend yield of 4% to 6%.
Dividends wont, however, exceed the reported profit after tax for the calendar year for which the dividend is paid, it said. Share buybacks can also be used to complement dividends, it added.
The Sampo Bank group unit posted a third-quarter net interest income of EUR96 million, up from EUR87 million a year earlier, thanks to higher lending volumes and higher interest rate levels.
(END) Dow Jones Newswires
The transaction, the biggest ever acquisition ever by the Danish bank, will add 125 branches and 3,475 staff to Danske Bank in Finland, as well as 33 branches and 1,100 employes in Estonia, Latvia and Lithuania. It also includes a newly acquired bank in Russia.
The deal doesnt include Sampos life and non-life insurance operations.
At 0829 GMT, Danske Bank shares were down DKK10.50, or 4%, to DKK252.50 in a lower Copenhagen market.
Sampo shares were up EUR1.95, or 11.1%, to EUR19.60 in a higher Helsinki market.
"Were getting access to both Finland and the Baltics," Danske Bank Chief Financial Officer Tonny Andersen told Dow Jones Newswires. "Finland is an area in the Nordics where we havent been visible, and by moving into Finland, and also the Baltic countries, this way we get a critical mass."
Hannu Vuola, Sampos head of corporate communications, said that talks between the two companies have been going on since October and that the reason for the sale of Sampo Bank was the price.
"We though it was good price and that our shareholders will profit from it," he said.
In connection with the purchase, the Danske Bank Group plans to issue new shares, which are expected to provide proceeds of up to DKK14 billion. The remaining purchase amount will be funded through the issue of tier 1 hybrid capital, subordinated debt and through other liquidity sources.
Danske Bank Chief Executive Peter Straarup said in a statement that the investment in Finland is in line with Danske Banks strategy of expanding its retail banking activities in Northern Europe.
"Our joint banking concept -- the Danske Banking Concept -- provides a sound platform for expansion," he said. "Sampo Bank is attractive because its retail banking profile and structure match ours and support our strategy of further geographical and risk diversification.
"Another advantage is that economic growth in Finland and in Estonia, Latvia and Lithuania exceeds the European Union average," he added. "That provides an excellent basis for continuing growth."
An analyst, who asked not to be named, said the buy was a good move for both parties. The price was at the high-end, he said, but "Danske is known to be very smart, so from a capital perspective, and in terms of synergies, I think theyve calculated this."
Martin Gottlob, Danske Bank head of investor relations, said that the buy is roughly around 20% of Danske Banks market capitalization. It will remain the second-largest player in the Nordics after Nordea Bank AB (NDA.SK) in terms of market capitalization, he said, "but measured against assets I think we might become number one."
Karl Morris, analyst at Keefe, Bruyette and Woods, said that the size of Sampo group after the transaction will depend on what the group decides to do with its excess capital.
"Theres not that much information at the moment, so well have to wait until they tell us more," he said.
In a separate release after the release of its third-quarter results earlier Thursday, Sampo said it aims to distribute an annual dividend corresponding to a dividend yield of 4% to 6%.
Dividends wont, however, exceed the reported profit after tax for the calendar year for which the dividend is paid, it said. Share buybacks can also be used to complement dividends, it added.
The Sampo Bank group unit posted a third-quarter net interest income of EUR96 million, up from EUR87 million a year earlier, thanks to higher lending volumes and higher interest rate levels.
(END) Dow Jones Newswires
