Under this agreement, Santander will create a holding company made up of its insurance units in Latin America. Zurich will acquire 51% of the company and will manage the companies.
Santander will retain a 49% stake and will enter into an agreement to distribute the alliance’s insurance products in each country for 25 years.
The Santander insurance units included in the transaction would be valued at $3.27bn. Zurich will pay Santander 51% of that amount, $1.67bn, at the close of the transaction.
Santander said that in addition, during the 25 years of the distribution agreements, there is an earn-out mechanism for achieving specific profit performance targets and a mechanism that would protect against possible under achievement.
The closing of this transaction is subject to final documentation and the appropriate authorizations from the different regulators,
Grupo Santander said that the capital gains amounting to $1.21b, which will be assigned to reinforcing the bank’s balance sheet.
