Santander offloads Cepsa stake to MidEast group

Santander, Spain's biggest bank, said on Tuesday it had agreed to sell its 32.5 per cent stake in oil refiner Cepsa to the International Petroleum Investment Company (IPIC) of Abu Dhabi for €2.8bn ($3.8bn). The sale, following about a year of on-off negotiations, represents the divestment of the Spanish bank's last remaining significant equity holding. Union Fenosa, the Spanish electricity group, is also expected to sell its 5 per cent stake in Cepsa as part of the same deal.

IPIC will pay €3.3bn in total to lift its current 9.5 per cent stake to about 47 per cent, making it the second biggest shareholder after Total, the French oil major. Some analysts have said that Santander's failure to sell the Cepsa stake last year was one of the reasons it was forced to raise €7.2bn ($9.2bn) of equity via a rights issue completed in November.

The bank has also had problems finding a buyer for its fund management and insurance operations, and is now under pressure to sell residential and commercial property to pay back investors in a troubled real estate fund.

Santander said on Tuesday it would sell its Cepsa stake at €33 a share, compared with Monday's closing price of €31.5.

The shares have traded down to this level in recent weeks after a regulatory filing a month ago confirming details of the proposed sale. The sale price compares with the €28 a share Santander paid to build its 20 per cent Cepsa holding to 36 per cent in 2003, in a partial takeover that sparked a legal battle with Total. This was finally resolved in 2006, when an arbitrator ordered the two to unwind a joint investment vehicle. Santander was also forced to sell part of its stake to the French group at a deep discount.

It began casting around for buyers for its remaining holding soon after, helping fuel a speculative rally that, added to climbing oil prices, pushed Cepsa's shares beyond €72 at one stage.

Alfredo Saenz, chief executive of Santander, said on Tuesday: "The holding in Cepsa was the last of a series of industrial stakes Banco Santander has sold in recent years in order to concentrate exclusively on its core retail and commercial banking activities."

The deal is the latest in a flurry of purchases by IPIC, which has a remit to invest Abu Dhabi's excess hydrocarbon earnings in the upstream oil and gas sector around the world.

Last month, it spent $2.3bn buying Nova Chemicals, Canada's largest plastics producer. It also holds 70 per cent of Man Ferrostaal of Germany and is a large shareholder in Austria's Borealis and OMV.

The remit in invest in oil, gas and petrochemicals was stretched last week when Aabar, an IPIC affiliate, paid €1.95bn for 9.1 per cent of Daimler, the German carmaker. Last year, Aabar also paid SFr307m ($253m) for AIG Private Bank of Switzerland. 

IPIC is chaired by Sheikh Mansour bin Zayed Al Nahyan, who is also the minister responsible for managing the office of  the president of the UAE. Sheikh Mansour led the group which bought the UK's Manchester City football club last year and personally holds shares in Barclays, the UK bank.

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