The verdict of the Spanish stock market on the rejection of the latest banking merger was twofold yesterday, after avoiding punishing Sabadell (it only fell by 0.5%, to 1.88 euros per share) and after rewarding the BBVA for not having undertaken, at least for the time being, a purchase that would cause it overexertion (it rebounded by 3.6%, up to 10.20 euros). From today everything can change, as many analysts believe that there will be a second assault on the bank chaired by Carlos Torres, but this time offering cash. BBVA is silent and the market tries to sharpen the shot while it makes its speculations.
The fact that Sabadell continues to be above the pre-offer price (8%) may be due to investors trusting the stand-alone strategy or because they are expecting a counteroffer. Analysts do not question that Sabadell can distribute the 2.4 billion euros via dividends that it committed to on Monday after rejecting BBVA’s proposal. An Alantra report estimates that “Sabadell aims for 1.5 billion euros in net profit per year”. Jaume Puig, general manager of GVC Gaesco Gestión, believes that Sabadell “has no problem continuing alone”, although he assumes that there will be a counteroffer. Part of the market also expects it because BBVA shares are still 6% below the pre-offer level.
For Nuria Álvarez, from Renta 4, if Sabadell has kept the pulse on the stock market it is because the bank “has now been put in relief”. “BBVA has released the accounts” and, even if with another intention, it has shown that Sabadell was trading below its potential. As for BBVA, investors are “waiting”. It goes up in the stock market, but it does not recover all the lost value because there is still a probability of further moves.
This view is shared by other analysts. Antonio Castelo, from iBroker, thinks that “Sabadell was trading at a ridiculously low price” and that “now the market knows how much it is worth”. BBVA, on the other hand, “has put its cards on the table” and it is already known that it “wants to gain momentum in Spain”, so the market is waiting for news. From XTB, Manuel Pinto assures that “this is not over yet” and that “it is hard to believe that BBVA does not have a rock in its belt”.
These comments give an account of the state in which the market was yesterday, dominated by conjecture and assumptions. In the meantime, BBVA guards its weapons and does not go beyond the cherished message published after learning of Sabadell’s rejection. He “regrets” the refusal and reiterates that his proposal was “attractive”. Its president was in Mexico yesterday, at a meeting of regional managers.
The unknown now is whether BBVA will improve the proposal with a cash payment, whether it will launch a hostile bid or whether it will withdraw. Of the three hypotheses, the first was very much alive in analyst reports yesterday. If there is another approach, it must be generous enough to convince Sabadell, but not so much as to damage BBVA’s solvency.
Citi sees recourse to an improvement of up to 2.6 euros in cash, Santander considers a negotiation between the parties “difficult”, Autonomous warns of a possible hostile takeover, CaixaBank BPI does not close the door to any option. JBCapital believes that BBVA could raise the offer by 10%, Accuracy warns of the risk of entering into corporate battles and Kepler agrees that an aggressive counterattack is “very risky”.
Meanwhile, the governor of the Bank of Spain, Pablo Hernández de Cos, assured yesterday, after refusing to assess the specific operation, that “it may be a good time to pay attention to what is the optimal level” of concentration in the sector banking, taking into account that “before it was below the European average and now it exceeds it”. “It is a question to be analyzed”, he added during his appearance at Congress and in response to ERC spokeswoman Inés Granollers, who communicated her concern about the level of competition in Spanish banking. It was the last appearance of Hernández de Cos in Congress, as his term as governor of the Bank of Spain ends this June.
