Santander Consumer USA (SC) CEO Departure Could Lead to Take-In, UBS Says

UBS analyst Matthew Howlett said the departure of Santander Consumer USA Holdings Inc. (NYSE: SC) CEO/Founder Tom Dundon will lead to an inevitable take-in by parent Santander Holdings (SHUSA). The firm reiterated its Buy rating and price target of $30 on SC.

Howlett commented, "On Thursday SC announced that CEO/Founder Tom Dundon has stepped down and will sell his 10% stake to parent Santander Holdings (SHUSA), pending Fed approval. Dundon will stay on as an advisor and Board member. We believe SHUSA's steps to increase its ownership of SC to 70% indicate a full acquisition over the next 1-2 years. In this, we point to Banco Santander’s acquisition of Carfinco at 4.8x BV compared SC's current 2.4x P/BV. We believe SC is set up for a similar path as other auto finance businesses that became wholly owned subsidiaries of large banks, e.g., Capital One and Wells Fargo. As for Dundon's decision, we believe he was comfortable leaving money on the table in exchange for professional independence and that the $26.83 sale price was a gesture of respect to shareholders—the share price having recently surpassed the $24 Jan 2014 IPO price—not an indication of the intrinsic value of the company."

For an analyst ratings summary and ratings history on Santander Consumer USA Holdings Inc. click here. For more ratings news on Santander Consumer USA Holdings Inc. click here.

Shares of Santander Consumer USA Holdings Inc. closed at $26.20 yesterday.

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