Banco Santander, S.A. enters into an Agreement to Acquire Carfinco Financial Group Inc. for CDN$298 million in cash

Carfinco Board recommends that Shareholders support the Transaction

MADRID, Spain and EDMONTON, Sept. 16, 2014  Carfinco Financial Group Inc. ("Carfinco") (TSX:CFN.TO - News) announced today that it has entered into an arrangement agreement (the "Arrangement Agreement") with Banco Santander, S.A. ("Santander") (CATS:SAN, NYSE:SAN, BATS-CHIXE:SANE) and Santander Holding Canada Inc. ("Acquireco"), a wholly owned subsidiary of Santander, pursuant to which each Carfinco shareholder will receive cash consideration of CDN$11.25 for each common share of Carfinco (a "Share"), representing total equity value on a fully diluted basis of approximately CDN$298 million.  The cash consideration that Carfinco shareholders will receive under the Arrangement represents a 32.12% premium to the 90-day volume-weighted average share price ending September 15, 2014 (the last trading day prior to the announcement of the Arrangement).  The Arrangement is expected to close in the fourth quarter of 2014.

In conjunction with the Arrangement, Carfinco has also agreed to declare and pay a special dividend, which will be payable to shareholders of record on the closing date. The amount of the special distribution will be determined closer to the closing date and is subject to necessary approvals.

Juan Rodriguez Inciarte, senior executive vice president and head of Strategy at Santander, said: "We are excited to sign this agreement with Carfinco, which allows us to enter a market with good growth potential such as Canada, where we hope to reach agreements with other car manufacturers like those we have signed in other countries."

"We are delighted with the value this all cash offer of $11.25 per share brings to our shareholders," said Tracy Graf, CEO of Carfinco. "We look forward to becoming a division of Santander, one of the top banks in the world, and recognize the benefits their wealth of knowledge, experience and relationships in the auto finance industry will bring to the Canadian market."

Details of the Arrangement

The Board of Directors of Carfinco (the "Carfinco Board") formed a committee of independent directors (the "Independent Committee") to, among other things, review and evaluate the terms of the proposal from Santander, to obtain and supervise the preparation of a formal valuation of the fair market value of the Shares, to make a recommendation to the Carfinco Board in respect of the proposal and to assist in, and oversee the negotiation of, the terms and conditions of the Arrangement Agreement and related matters.

The Independent Committee has retained GMP Securities L.P. ("GMP") to provide, under the supervision of the Independent Committee, an independent formal valuation (the "Valuation") to be prepared in accordance with Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions ("MI 61-101"). In addition, GMP has provided an opinion (the "Fairness Opinion") to the Independent Committee that the consideration being offered by Acquireco to the shareholders of Carfinco is fair, from a financial point of view, to the shareholders of Carfinco. The Valuation and Fairness Opinion will be included in the directors' circular that will be sent to Carfinco shareholders.

The Arrangement was unanimously recommended by the Independent Committee to the Carfinco Board.  The Carfinco Board (with interested directors abstaining), after receiving the unanimous recommendation of the Independent Committee, has unanimously determined that the consideration to be received by the shareholders pursuant to the Arrangement is fair, from a financial point of view, to the shareholders and that the Arrangement is in the best interests of Carfinco and has unanimously approved the Arrangement and the Arrangement Agreement and resolved to recommend that Carfinco shareholders vote in favour of the Arrangement.

All of the members of the Carfinco Board and Carfinco's executive officers, who collectively own directly or indirectly or exercise control or direction over approximately 12.9% of the outstanding Shares, have entered into support agreements with Acquireco pursuant to which they have agreed to vote their Shares in favour of the Arrangement, subject to the provisions thereof.

The Arrangement will be carried out by way of a statutory Plan of Arrangement under the Business Corporations Act (Alberta) and will require the approval of (i) two-thirds of the votes cast by Carfinco shareholders and (ii) a majority of the votes cast by Carfinco shareholders (excluding the Management Shareholders and the principals of Patica (each as defined below)) at a special meeting to be called to consider the Arrangement. The Shareholder Meeting is expected to be held on or before November 3, 2014.  The transaction is further subject to the approval of the Court of Alberta, subsequent to the shareholder vote, and other applicable regulatory approvals including under the Bank Act (Canada) and by the Bank of Spain, and other conditions customary for an arrangement of this nature. The Arrangement is not subject to any financing conditions.

The Arrangement provides for customary non-solicitation provisions, subject to customary "fiduciary out" provisions that entitle Carfinco to terminate the Arrangement in favour of an unsolicited superior proposal, subject to a termination fee of CDN$7,450,000 and subject to a right in favour of Santander to match any superior proposal.

As part of the Arrangement, certain executive officers of Carfinco, including the current President and CEO, the COO, the CFO and VP – Account Acquisition (together, the "Management Shareholders") will be re-investing a portion of their proceeds from the sale of their Shares into the entity that will be acquiring Carfinco.  In addition, Patica Securities Limited ("Patica"), a consultant to Carfinco, is entitled under the terms of its existing agreement with Carfinco to receive a change of control fee of $400,000 upon completion of the Arrangement.

Mr. Graf and certain other key members of the management team will support Santander in the future growth of the company. Santander will leverage from Mr. Graf's expertise and knowledge of the Canadian market and expects that his contribution in this new phase will lead to a rapid growth in the coming years.

Carfinco is also active in the United States in the non-prime vehicle financing segment through its wholly-owned and separately operated subsidiary Persian Acceptance Corp. ("PAC") with its head office in Massachusetts. A condition precedent to the closing of the Arrangement is the divestiture of PAC.

In addition to the special dividend referenced above that will be payable on closing, monthly dividends will continue to be declared prior to closing. 

A detailed description of the terms and conditions of the Arrangement will be contained in a management information circular, which will be mailed to shareholders in due course, and will be available on Carfinco's website and at www.sedar.com. A copy of the arrangement agreement will also be available at Carfinco's website and on www.sedar.com.

Santander's financial advisor is RBC Capital Markets and their legal counsel is Blake, Cassels & Graydon LLP. Carfinco's legal counsel is Bryan & Company LLP and counsel to the Independent Committee is Fogler, Rubinoff LLP.

About Santander

Banco Santander (SAN.MC, STD.N, BNC.LN) is a retail and commercial bank, based in Spain, with a presence in 10 main markets. Santander is the largest bank in the euro zone by market capitalization. Founded in 1857, Santander had EUR 1.34 trillion in managed funds, 107 million customers, 13,225 branches – more than any other international bank – and 183,648 employees at the close of June 2014. It is the largest financial group in Spain and Latin America. It also has significant positions in the United Kingdom, Portugal, Germany, Poland and the northeast United States. In the first half of 2014, Santander registered EUR 2.756 billion in attributable profit, an increase of 22% from the same period of the previous year.

About Carfinco

Carfinco is listed on the Toronto Stock Exchange (TSX) and its head office and credit/collection center are located in Edmonton, Alberta.

The company, which was founded in 1997, is specialized in non-prime consumer vehicle financing. The company purchases loans made by select independent and franchised vehicle dealers in all ten Canadian provinces. It works currently with over 2,200 dealers of which 45% are franchised dealers and 55% independent dealerships. The company has a geographically diverse portfolio (60% West and 40% East) and as at the end of June 2014 had CDN 278 million principal balance of finance and 29,500 customers. Net profit for the trailing twelve months amounts to CDN$20.2 million with a corresponding ROE of 29.0%.

Caution Regarding Forward-Looking Statements – This news release contains certain forward-looking statements, including statements with respect to the timing for completion of the Arrangement, with respect to the special dividend and with respect the business and anticipated financial performance of Carfinco.  These statements are subject to a number of risks and uncertainties.  Actual results may differ materially from results contemplated by the forward-looking statements.  When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements.

SOURCE Carfinco Financial Group Inc.

Contact:

For further information about Carfinco, please contact: Mr. Tracy A. Graf, CEO & Director of Carfinco Financial Group Inc., Telephone: 1-888-486-4356, Facsimile: 1-888-486-7456, E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it., Web site: www.carfinco.com; The Howard Group Inc., Jeff Walker, Investor Relations, Telephone: 1-888-221-0915, E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it., Web site: www.howardgroupinc.com; For further information about Santander, please contact: Mr. José Manuel Campa, Head of Investor Relations, Telephone: +34 91 2596514 or +34 91 2596520