BBVA wants Sabadell’s shareholders to decide directly on the purchase offer once the board of directors of the entity born in Catalonia has rejected it. This is the reasoning that has led BBVA to present yesterday by surprise a hostile takeover bid in the same terms as the proposal sent on April 30 to the entity’s leaders. Without raising it and without offering cash. His unexpected decision caused a real political and business upheaval yesterday, with the frontal rejection of the central government, the Generalitat, the Catalan political parties immersed in the electoral campaign, employers and unions.
BBVA’s offer to Sabadell shareholders maintains the elements already known: an exchange of 4.83 BBVA shares for each one that would give Sabadell shareholders 16% of the resulting group’s capital. The commitment to a double operational headquarters, in Madrid and Sant Cugat, and the preservation of the Sabadell brand in some areas is also reiterated. Despite this, Sabadell is no longer guaranteed a vice-presidency or three positions on the council. For the president of BBVA, Carlos Torres, “now is not the time to talk about this”.
The takeover values ??the Sabadell share at 2.12 euros, and the bank as a whole at almost 12.4 billion. Its shares rose yesterday on the stock market by 3.2%, up to 1.86 euros, encouraged by the offer, while those of the bank chaired by Torres fell by 6.7%. This second major merger attempt has already cost BBVA more than 8,000 million in capitalization. BBVA is in a good moment, but it is aware of the erosion generated by the operation. Yesterday he communicated the message that the offer will not improve, even if a white knight appears to help Sabadell.
Although Torres emphasizes that the takeover is not hostile, it is true that it is, since it has been rejected by the board of Banco Sabadell. Despite the fact that yesterday there was no pronouncement on the tender, since nothing changed with respect to last week’s offer, it is taken for granted that Sabadell’s governing body is against it. The council has already considered that the proposal “significantly undervalues” the entity and has detailed that its future project offers more value.
The tender offer is conditional on reaching an acceptance level of 50.01%. It will require the approval of the ECB, the CNMV and the competition authorities, both the CNMC and the British and Mexican authorities. The process can last between six and eight months, and will be activated in less than two weeks, with the presentation of the offer brochure to the market supervisor. Exceeding half of Sabadell’s capital would allow BBVA to receive dividends, consolidate 100% of the result in its accounts and control both the board of directors and the board.
However, the ambition goes through a subsequent absorption through merger, which would require the approval of the Ministry of Economy. Yesterday, the Spanish Government flatly rejected this eventual integration, as it considers that it would have “harmful” effects on competition, financial stability and territorial cohesion.
At the moment, the BBVA takeover is in favor of the fact that Sabadell’s capital is very fragmented and that there is no hard core of shareholders with representative stakes able to oppose it. He says his offer is “exceptionally favorable” and will have “very positive financial impacts”. And on the contrary, almost half of the shareholders are minority, and almost all of them are clients of the bank with almost ten years of experience in the capital.
Yesterday, Catalan society came out en bloc against the operation, with signs of rejection from the political, business and union spheres. The president of the Generalitat, Pere Aragonès, opposed it because of the high banking concentration and warned of the risk to employment. “I don’t think it’s the model or the manners,” said the PSC candidate in Sunday’s elections, Salvador Illa. There is a strategy “to liquidate Catalan banking activity”, pointed out Junts’ candidate, Carles Puigdemont. Also the president of the Valencian Community, the popular Carlos Mazón, spoke “absolutely” against it.
The message from Foment and Pimec is that the big losers would be companies, and especially SMEs, due to the reduction in competition. The unions warned that they will not accept “forced” staff cuts.
