One day after Banc Sabadell rejected the BBVA merger proposal for “significantly undervaluing” the bank, the price of both entities has not completely returned to the starting point and the analysts and experts consulted warn that there may still be surprises .
The dominant opinion is that the bank chaired by Carlos Torres has room to raise the offer and even pay in cash, although it must be careful with the numbers. If the improvement is modest, it is difficult for Sabadell to change their mind; and if there is a hostile takeover, BBVA’s solvency must be measured to the millimeter. All options are open, including of course complete withdrawal or launching into another operation. Analysts today juggle every possibility.
A first clarification is that BBVA’s margin is relative, despite having 5.4 billion euros of freely available reserves. “Our base scenario is an improvement in the offer, but we will have to see to what extent BBVA is willing to deteriorate its profit per share and its capital,” warns Nuria Álvarez, from Renta 4. Of course, we would also have to ask “how much Sabadell needs more,” he adds.
A report from the US bank Citi published today sees a path forward for an improvement in the proposal in which a cash payment is added, raising Sabadell’s share price to 2.6 euros, compared to 2.25 euros in the previous years. is valued in the exchange of shares. It is equivalent to valuing Sabadell at more than 14,000 million, compared to the nearly 12,000 million in the BBVA proposal.
The operation, he says, makes “industrial sense”, but adding the cash payment has its cost for BBVA: for every 1.1 billion in cash it pays, its solvency ratio will decline between 0.25 and 0.3 points.
For Santander analysts, “it is difficult to imagine additional negotiations between both parties,” in view of the way in which the Sabadell board rejected the operation yesterday. BBVA’s options are now “limited” and are reduced to two: launch a hostile takeover bid in search of acceptance of two-thirds of Sabadell’s capital to be able to absorb it or, otherwise, “forget the operation and leave the banking sector.” Spanish as today.”
Both Bankinter and Autonomous analysts see it as “unlikely that both parties will be able to reach an agreement”, which leads the latter to allude to the possibility of a hostile takeover “as a way for BBVA to save face”. His message is that BBVA “does not desperately need Sabadell.” The bank is also not known for being “aggressive” in operations, so you may decide to look elsewhere. He could even try to approach Unicaja, although it may not be entirely strategic, he says.
From CaixaBank BPI, the impression is that “there is still the possibility that BBVA opts for a hostile offer”, given that on the Sabadell board there is only one member elected by shareholders, David Martínez. He also believes that the bank chaired by Carlos Torres could return with an improved offer.
And what would that second best offer be like? JBCapital believes that BBVA could raise the offer by 10% and even add a “cash component”, although it does not believe that this will change the opinion of the Sabadell board. “We think that BBVA should think about looking at alternative options to deploy its excess capital,” he says, before assigning a “marginal” probability to the hostile takeover.
Enrique Reina, banking partner at Accuracy, also believes that “a hostile takeover would be the worst scenario” that “would not interest anyone,” among other things because it would “cloud the market” and generate “instability.” BBVA, he recalls, has high liquidity and resources after leaving the United States in 2020.
From Alantra, the intuition is that BBVA will not improve the offer or opt for the hostile route, which would disfigure a bank’s history characterized by “financial discipline.” Its shares have already fallen 10% and it is unlikely that it will push the issue further, as “a friendly offer and a cash payment might even now seem inconsistent.”
Antonio Castelo, analyst at iBroker.es, does not rule out any option, but sets a bar for BBVA: 2.3 per share. “If it is not in cash and is below that, it is difficult for Sabadell shareholders to take it,” he says.
For Kepler analysts, a hostile takeover would be “very risky” and could be “a nightmare” for the ECB. He sees a mixed solution as more feasible, in which, without deteriorating BBVA’s solvency, 2.46 euros can be reached according to a mix of shareholders and cash. 87% in titles and 13% in cash.
From the credit rating agency Fitch the message is not very risky. The only thing he can specify is that, “if the operation does not go ahead, we do not see negative effects on either bank.” A few days ago, S
Whatever happens, you must do it quickly. “We think that the market expects a quick resolution of this interaction, in one sense or another,” say Mediobanca analysts.