BBVA wants Sabadell shareholders to directly decide on the purchase offer once the board of directors of the entity born in Catalonia has rejected it. This is the reasoning that led BBVA to present a surprise hostile takeover bid yesterday under 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 yesterday caused a real political and business upheaval, with the frontal rejection of the Government, the Generalitat, the Catalan political parties immersed in the electoral campaign, employers’ associations and unions. In a brief statement, Sabadell announced last night that it has reported to the National Securities Market Commission (CNMV) that the documentation and information provided by BBVA violates the takeover regime and introduces “incomplete data” that may affect the company’s information. available to investors.
BBVA’s offer to Sabadell shareholders maintains the already known elements: a share exchange of 4.83 shares for each BBVA title that would give Sabadell shareholders 16% of the capital of the resulting group. 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. However, Sabadell is no longer guaranteed a vice presidency or three positions on the council. For the president of BBVA, Carlos Torres, “it is not the time to talk about that now.”
The takeover values ??Sabadell’s share at 2.12 euros and the bank as a whole at almost 12.4 billion. Its shares rose 3.2% yesterday on the stock market, to 1.86 euros, encouraged by the takeover bid, while those of the bank chaired by Torres fell 6.7%. This second major merger attempt has already cost BBVA more than 8 billion in capitalization. BBVA is in a good moment, but it is aware of the erosion that the operation generates. Yesterday he conveyed the message that the offer will not improve even if a white knight appears to help Sabadell.
Although Torres highlights that the takeover bid is not hostile, the truth is that it is since it has been rejected by the board of Banc Sabadell. Although yesterday it did not rule on the takeover bid, by not changing anything with respect to last week’s offer it is assumed 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 greater value.
The takeover bid 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 results in its accounts and control both the board of directors and the board.
However, the ambition involves a subsequent absorption through merger, which would require the approval of the Ministry of Economy. The Government yesterday frontally rejected this possible integration, considering that it would have “harmful” effects on competition, financial stability and territorial cohesion.
For now, BBVA’s takeover bid has in its favor that Sabadell’s capital is very fragmented and there is no hard core of shareholders with representative holdings capable of opposing 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 minorities and almost all of them are clients of the bank with almost 10 years of experience in the capital.
Yesterday Catalan society came out in force against the operation, with signs of rejection from the political, business and union spheres. The president of the Generalitat, Pere Aragonès, opposed the high banking concentration and warned of the risk to employment. “I don’t think it’s the model or the forms,” said the PSC candidate in Sunday’s elections, Salvador Illa. There is a strategy “to liquidate Catalan banking activity,” said the Junts candidate, Carles Puigdemont. Also the president of the Valencian Community, the popular Carlos Mazón, expressed himself “absolutely” against it.
From Foment and Pimec the message 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.
