Banco Santander SA's $1.9 billion acquisition of Sovereign Bancorp Inc., announced Oct. 13, began initially as a search for capital but evolved quickly into a takeover proposition. Indeed, having the Spanish bank take control of Reading, Pa.-based Sovereign seemed the easiest and most logical solution, given that Santander has owned a 24.35% stake in Sovereign since 2005, says Frank Cicero, a managing director at Barclays Capital Inc., which advised Sovereign on the deal.

"In response to difficult market conditions, the conservative thing to do for Sovereign was raise additional capital," Cicero says. "Santander has members on the board, and they were part of the conversation on capital raising." The deal, he adds, came together over the Oct. 10 weekend.

Cicero joined Barclays in September, moving over from Lehman Brothers Inc. in the post-bankruptcy acquisition. Lehman's ties with Sovereign go back to the late 1990s, when the firm advised Sovereign on its $1.4 billion acquisition of 278 branches that were divested as part of the Fleet Financial Group Inc.-BankBoston Corp. merger. Cicero advised Independence Community Bank Corp. when that bank was acquired by Sovereign in 2005, and he also knows Sovereign's interim president, CEO and CFO, Kirk Walters, who was CFO of Burlington, Vt.-based Chittenden Corp., which People's United Financial Inc. acquired in January. Lehman was Chittenden's adviser on the deal. "It was a way to continue the Sovereign relationship," Cicero says of the Walters connection.

Working with Cicero on the deal were former Lehman cohorts Mark Burton and Jason Reid. The group also tapped London-based Abel Enguita Ferre, a Barclays veteran, to conduct due diligence on Santander.

Legal advice for Sovereign came from Milbank, Tweed, Hadley & McCloy LLP's Tom Janson and Roland Hlawaty. Sovereign's general counsel Richard Toomey hired Milbank in 2006 to advise the company on the issues raised by the Santander investment in 2005, and on Sovereign's $3.6 billion acquisition of Brooklyn, N.Y.-based Independence Community.

The board's special committee received advice from Sullivan & Cromwell LLP's H. Rodgin Cohen and John Evangelakos. Sullivan represented Ralph Whitworth, a member of the special committee, in his opposition to Santander's 2005 purchase of a stake in Sovereign. As part of the conflict's settlement, Whitworth joined the Sovereign board.

Santander, for its part, received advice from four banks, including a J.P. Morgan Securities Inc. team led by Fernando Rivas, a Lazard team led by Gary Parr, a Merrill Lynch & Co. team led by Seth Heaton and a Goldman, Sachs & Co. team of Mike Esposito, Juan del Rivero and Todd Leland.

Legal advice came from Davis Polk & Wardwell's Diane Kerr, Joseph Rinaldi and William Taylor. Davis Polk has represented Santander since the bank initially moved into the U.S. market.