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June 9, 2010 5:21 PM

Davis Polk, Wachtell on Sale of BofA's Stake in Santander Mexican Unit

Posted by Drew Combs

Banco Santander SA, one of Europe's largest financial institutions, has reached an agreement to acquire Bank of America Corp.'s nearly 25 percent stake in Grupo Financiero Santander, the Spanish bank's Mexican arm. Santander will pay $2.5 billion in cash for the stake, which it sold to Bank of America in 2003 for $1.6 billion. Once the deal closes, Santander will own 99.9 percent of the Mexico city-based Grupo Financiero Santander.

The bet on its overseas business comes at a time when Santander's home market is facing a great deal of volatility and uncertainty related to government debt obligations. For Bank of America, the transaction is part of a larger plan to offload noncore assets, according to several press accounts. Last month, it was reported that Bank of America would sell its stake in the Brazilian bank Itau Unibanco Holdings SA.

Santander was represented on the deal by a team of lawyers at Davis Polk & Wardwell headed by New York-based corporate partners Nicholas Kronfeld and Marc Williams. Partner Michael Mollerus advised on the tax aspects of the deal. Associates Carson Stewart and Seth Poloner rounded out the team.

Davis Polk has advised the Spanish banking conglomerate on a number of transactions in recent years. Last year, the firm advised Banco Santander (Brasil) S.A., part of the Santander Group, on an initial public offering of 525,000,000 units listed on the New York Stock Exchange and the Sao Paulo Stock Exchange. In 2008 the firm advised Banco Santander on the acquisition of the remaining 75 percent stake in Pennsylvania-based Sovereign Bank that it did not already own.

Bank of America was represented by Wachtell, Lipton, Rosen & Katz. The firm's team was led by corporate partner Nicholas Demmo and included tax partners Jodi Schwartz and Joshua Holmes as well as corporate associate John Robinson.

Wachtell also has been a longtime adviser to Bank of America, handling several transactions and other matters in recent years. It advised the Charlotte-based bank on its acquisition of Merrill Lynch & Co., Inc. (the deal was completed in January 2009). The deal came under some scrutiny amid allegations shareholders were mislead regarding losses and bonuses at Merrill.

The current transaction with Santander, which is subject to regulatory approval, is expected to be completed in 90 days.

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