Santander to buy Webster Financial in $12.3 billion US expansion
Spanish banking giant pays 16% premium for regional lender, creating top-ten US commercial bank
Banco Santander has agreed to acquire Webster Financial Corporation in a cash-and-stock transaction valued at approximately $12.3 billion, marking the Spanish banking giant's most ambitious expansion into the US market in decades.
Under the terms of the agreement announced Tuesday, Webster shareholders will receive $48.75 in cash plus 2.0548 Santander American Depositary Shares for each Webster common share. Based on Santander's closing price on February 2, the total consideration values Webster at $75.59 per share, representing a 16% premium to the company's 10-day volume-weighted average price and a 9% premium to its all-time high closing price.
Webster shares surged 9% to $71.93 in Tuesday trading, leaving approximately 5% upside to the transaction value pending completion, which is expected in the second half of 2026 subject to regulatory approvals and shareholder votes.
The acquisition would transform Santander's US operations into a top-ten retail and commercial bank by assets and a top-five deposit franchise in the Northeast region. For Santander, which has long sought to build scale in the strategically important US market, the deal accelerates its path to top-tier profitability, targeting an 18% return on tangible equity by 2028 and an efficiency ratio below 40%.
"This transaction creates a top-ten US retail and commercial bank with leading market positions in the Northeast and significant opportunities for growth," Santander said in the official announcement. "We will combine Santander's leading consumer finance business and digital deposit platforms with Webster's profitable commercial and healthcare-focused franchise."
Webster Financial, based in Waterbury, Connecticut, operates Webster Bank and has built a strong franchise serving commercial and healthcare clients with a low-cost deposit base. The combination with Santander's consumer lending expertise is projected to generate approximately $800 million in cost synergies and be 7-8% accretive to earnings per share by 2028, according to the merger agreement filed with the SEC.
For Webster shareholders, the deal represents a substantial exit after a period of strong performance. The regional bank's shares had already gained more than 75% in the past year amid improving credit conditions and interest rate tailwinds for regional banks. With a current market capitalization of $10.6 billion, 93.7% institutional ownership, and a price-to-earnings ratio of 11.13, Webster had become an attractive acquisition target for larger banks seeking geographic expansion.
Analysts have viewed Webster favorably, with 16 analysts rating it a buy or strong buy and none recommending a sell, according to market data. The consensus target price of $75.65 aligns closely with the acquisition offer price of $75.59 per share.
The deal comes as consolidation accelerates among US regional banks, which have faced pressure from elevated funding costs and increased regulatory scrutiny following the failures of several mid-sized lenders in 2023. Larger banks like Santander are using the disruption as an opportunity to acquire attractive franchises at reasonable valuations while expanding their geographic reach.
Santander's move follows a strategy of pursuing bolt-on acquisitions to accelerate organic growth in its core markets. The Spanish banking group already operates Santander Bank in the US, primarily in the Northeast, but the Webster acquisition would significantly scale its commercial banking capabilities and deposit base.
The transaction must clear regulatory hurdles including approval from the Federal Reserve, Office of the Comptroller of the Currency, and state banking regulators. The companies expect the deal to close in the second half of 2026.
For the broader US banking sector, the deal signals renewed confidence in regional bank valuations and the appetite of large international banks to expand American operations despite ongoing economic uncertainty. With $12.3 billion changing hands, it ranks among the largest US banking acquisitions of the past decade.