Danske Bank acquires Sampo for $5.15 bn
Danske Bank A/S, the Nordic region’s second-biggest financial institution by market value, agreed to buy Sampo Bank for 30.1 billion Danish kroner ($5.15 billion) in cash, adding 159 branches in Finland and the Baltics.
The Copenhagen-based company will sell shares and bonds to pay for the purchase, the bank said in a statement on Thursday. Danske is purchasing Sampo Bank from Helsinki-based insurer Sampo Oyj.
“It’ll be hard to do any banking in the region without running into Danske,’’ said Ricky Steen Rasmussen, an analyst at Alm Brand Bank A/S in Copenhagen. “The buy gives Danske a solid pan-Nordic network, placing it on the same level as’’ Nordea Bank AB, the region’s largest bank by market value. He rates Danske Bank shares a “buy.’’
Danske Bank will increase its foreign branches 56% to 440 and extend its presence in Finland, where economic growth exceeds that of its home market. The purchase will help lift foreign earnings, which last year CEO Peter Straarup said would double in the five years to 2010.
• Danish bank to increase its foreign branches to 440 and boost its presence in Finland, where economic growth exceeds that of its home market
• Buyout values Sampo at 3.5 times book value against an industry average of 2
“We have had a hole in our strategy and coverage in management by not having Finland as a complete member,’’ Straarup said at a press conference in Helsinki on Thursday. “And now that hole has been closed, I think the whole group will benefit.’’ The acquisition values Sampo bank at 3.5 times book value, compared with an industry average of about two times for similar takeovers, Rasmussen said.
“It’s a good deal, though the price is high,’’ Matti Ahokas, an analyst at Svenska Handelsbanken in Helsinki, said in a telephone interview. He rates shares of Danske “accumulate.’’ “You can’t get good banks cheaply and Sampo is a good bank. There’s a strategic premium involved and Danske knows how to be very efficient,’’ he added.
Shares of Danske Bank dropped as much as 7.2% and traded 5% lower at 249.75 kroner as of 12:50 pm in Copenhagen. Shares of Sampo soared as much as 12% and traded 8.3% higher at 19.16 euros in Helsinki. The Finnish economy’s annualised growth rate was 6% in the second quarter, compared with 2.8% in Denmark, according to statistics office data.
—Bloomberg
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