With the IPO market bubbly, major companies are seizing the opportunity for spinoffs. And one of the latest is from Banco Santander SA (SAN), which is the largest euro zone bank (based in Spain). SAN has filed with the Securities and Exchange Commission to set the terms of the deal, which calls for issuing 65.2 million shares in its Santander Consumer USA Holdings unit at a range of $22 to $24. After news about the Santander spinoff, SAN stock actually down about 1%.
Santander Consumer USA calls itself a “full-service, technology-driven consumer finance company focused on vehicle finance and unsecured consumer lending products.” At the heart of the platform is an extensive analytics system, which has been critical in managing loan risks.
No doubt, Santander Consumer USA has invested heavily with online assets as well. To this end, the company operates RoadLoans.com, which has relationships with companies like Cars.com, AutoTrader.com, Kelley Blue Book, and eBay’s (EBAY) eBay Motors. There are even peer-to-peer lending efforts, with partners like Bluestem Brands and the LendingClub.
The timing should be good for the Santander spinoff. It looks like the U.S. auto market is poised for strong gains, which should drive demand for new loans. And yes, Santander Consumer USA is highly profitable. For the first nine months of last year, the company posted net income of $581.7 million on $2.8 billion of finance and interest income.
As for the Santander spinoff, shares will be issued on the NYSE under the symbol of “SC.” All of the firm’s private equity holders — including Warburg Pincus, Kohlberg Kravis Roberts (KKR) and Centerbridge Partners — will sell shares in the transaction. The lead underwriters for the Santander spinoff are Citigroup (C) and J.P. Morgan (JPM).
SAN stock is one of InvestorPlace’s 10 Best Stocks for 2014.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.