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MADRID, Oct 31 (Reuters) - Spanish bank Santander's stake in its Brazilian unit will rise to 88.3 percent, it said on Friday, after it offered to buy out minority shareholders last month in an effort to turn around the underperforming subsidiary.
Santander launched an offer in mid-September for the 25 percent of Santander Brasil it did not already own. That has been accepted by investors representing 13.65 percent of the subsidiary's capital.
Santander also said it was set to issue around 370.9 million new shares - worth around 2.6 billion euros (3.3 billion US dollar) at current market prices - to finance the deal, which will be done through a share swap.
The newly issued shares represent around 3 percent of Santander's capital. The bank's stock was up around 1 percent at 0825GMT, at 6.918 euros per share.
Santander, which has seen earnings recover after a deep financial crisis in its home market, has been working to boost returns in its Brazilian unit, which have flagged as the local economy faltered.
Santander's new Chairwoman Ana Botin, who took over from her father Emilio Botin after he died in September, recently insisted she saw Brazil overcoming its current economic slowdown, adding she would maintain the bank's push to diversify internationally.
The bank's buyout offer, at the equivalent of 15.31 reais (6.368 US dollar) a share, represented a 20 percent premium to Santander Brasil's share price when it was first outlined in April. The stock has since rallied, narrowing the premium to around 7 percent at the unit's closing price on Thursday.
The buyout also gives investors in Santander's Brazilian unit a chance to gain exposure to the bank's turnaround in Europe, as earnings pick up in areas such as Britain.
Santander said in its statement on Friday that shareholders in Santander Brazil who had not accepted the tender offer had lost the right to ask for their shares to be bought out with the same terms over the next three months. (1 US dollar = 0.7955 euro) (1 US dollar = 2.4042 Brazilian real) (Reporting by Sarah White; Editing by Sonya Dowsett and Clara Ferreira Marques)