Wednesday, Jan. 03, 2007, 07:00 PM UPDATED 11:59 AMBy Nick Zulovich
DALLAS — Banco Santander Central Hispano announced the completion of its acquisition of Drive Financial Services. As indicated previously by company insiders, acquisition will have no impact on Drive's business. Drive will continue to originate loans across the entire subprime spectrum.
According to executives, Drive's business plan and executive management team will remain unchanged. Thomas Dundon, president and chief operating officer of Drive, will add the role of chief executive officer. As a part of the deal, Dundon is retaining 10-percent ownership of the company.
Drive said it will continue using One Complete Solution to market its offerings.
"Santander's ownership and Drive's credit risk expertise will help us to continue to improve our mix of business to include higher quality originations while maintaining our ability to sustain rapid growth," explained Dundon.
"We believe we are poised to become one of the leading companies in our industry," he added.
When Drive first announced it was being acquired, Bill Hendry, managing director of HBOS in North America and chairman of Drive, said, "The sale represents a logical move for HBOS — both financially and strategically."
Allan Garraway, former CEO of Drive Financial Services, added, "Transferring ownership of Drive to a multinational financial institution with an international focus in auto finance is the right move to continue the phenomenal success story."
Santander said its acquisition of Drive will expand its existing auto lending franchise and increase the company's presence in North America.
"This transaction represents a qualitative leap for Santander Consumer Finance," said Juan Rodriguez, head of Santander Consumer Finance. "Drive is the niche business leader in a business in which Santander has a solid record of success in Europe, which we will aim to repeat in the U.S., the world's largest market.
"We believe Drive is exceedingly well-positioned for growth and has excellent servicing and asset-quality control platforms," he continued.
Dundon added, "Drive believes we have found the ideal partner to support our continued evolution into one of the most successful auto finance companies in the country."
The transaction is valued at $636 million, and Santander said the acquisition will contribute 1.5 percent to its 2007 earnings per share. Moreover, executives said the acquisition will generate $540 million in goodwill.
Santander said the parties have signed a series of options which could enable Grupo Santander to buy the additional 10 percent remaining share in Drive between 2009 and 2013 at prices related to the company's earnings performance.
As of late summer, Santander said Drive's financial assets came in at approximately $2.53 billion, and its loan portfolio was $2.4 billion. The company has about 600 employees, and its products are distributed through more than 10,000 dealer partnerships.
Santander Consumer Finance is one of Grupo Santander's core businesses. The bank's profits rose 22 percent in the first half of the year over the prior year, according to executives.
The company manages a loan portfolio of €34,477 million and deposits worth €14,197 million. Before the Drive acquisition, the financial institution was focused on 13 European countries, in particular, Spain, Germany, Italy and Poland. Santander Consumer Finance said it has 5,304 employees and 278 branches.