Spain's Santander has agreed to sell its 32.5 percent share in Spanish oil company Cepsa to Abu Dhabi fund IPIC at 33 euros per share or about 2.87 billion euros ($3.80 billion).

Cepsa is a petrochemical and refinery group with a large service station network throughout Spain and Portugal.

The price was below the 45 to 55 euros negotiated last year when talks between Santander and IPIC over Spain's second largest oil company failed, but was in line with recent reports of a 30 to 35 euro band.

Cepsa's shares closed at 31.5 euros on Monday and were trading 1.3 percent higher to 31.91 euros by 0745 GMT.

Santander rose 1.4 percent to 5.01 euros, while Fenosa was virtually unchanged at 18.0 euros, compared to a 1 percent gain on Spain's Ibex-35 leading share index.

'The news is positive, but was already discounted,' Renta4 analysts said in a note.

Spanish power firm Union Fenosa sold its 5 percent in Cepsa as part of Santander's agreement with IPIC and under the same terms. Fenosa had given Santander a mandate to bundle its holding with the bank's as both sought to divest non-core assets.

'The holding in Cepsa was the last of a series of industrial stakes Banco Santander has sold in recent years in order to focus exclusively on its core retail and commercial banking activities,' Santander's chief executive Alfredo Saenz said in a statement.

IPIC will become Cepsa's second largest shareholder with approximately 47 percent after France's Total following the deal, which is subject to regulatory approval and financing.

The final price of the offer will be lower to reflect the dividends that Cepsa could pay in 2009, Santander said, while adding that the exclusion of Cepsa from its books would not have any impact on its bottom line. - Reuters