On December 1, 1987, La Vanguardia published on the front page “Bilbao’s offer for Banesto unleashes open war between the two banking groups.” It was the last hostile takeover in the Spanish banking sector until the one launched yesterday against Sabadell. Curiously, one of the protagonists of this new hostile takeover bid is the heir to that operation: BBVA. At that time the current takeover law did not exist and that is why there are many questions about a process that can last up to eight months.
What is a takeover bid?
A public acquisition offer (takeover bid) is a purchase proposal made by one company for the shares of another.
What does it mean to be hostile?
That is not agreed between the parties. A takeover bid can be friendly, which implies that it has been agreed between the offeror and the reference shareholders or the board of directors of the entity that wants to buy. And it can be hostile – as in the case of BBVA – because it has the rejection of the Sabadell governing body. The hostile qualification “does not prejudge its possible interest for shareholders,” says the CNMV.
What price does BBVA pay for Sabadell?
There is no purchase price, but rather an exchange of shares. BBVA will deliver one of its own shares for every 4.83 Sabadell shares. The equivalent cash price resulting from applying the consideration to the average price is 2.12 euros. That means valuing Sabadell at 12,376 million euros.
What do current Sabadell shareholders gain?
Calculated with the quotes of the two banks on the 29th, the day before BBVA’s interest in Sabadell became known, the premium is 30%. What happens is that as the titles of both entities fluctuate, the premium changes at all times and may disappear.
Is there room for improvement in the offer?
BBVA has assured that it will not, but some analysts believe that there is always the possibility of increasing the price.
What happens after the takeover?
If all Sabadell shareholders accept the offer, they will control 16% of the capital of the future entity, as had already been proposed in the first offer from the bank chaired by Carlos Torres.
Is there any condition?
Yes. The takeover bid is subject to a minimum acceptance level of 50.01%.
What happens if that percentage is not reached?
That the offer is void.
What is the calendar?
BBVA contemplates a calendar of about six months from the announcement of the offer, as can be seen in the graph. In a couple of weeks it will present the offer brochure, with all the details, after which it will collect regulatory authorizations. When the time comes, the entity will have to approve a capital increase at a shareholders meeting. After that, there would be up to two months for the exchange of shares: the takeover bid can thus last about eight months.
Who has to approve the operation?
The takeover bid requires validation from the European Central Bank (ECB), the CNMV, the CNMC and the authorities of the United Kingdom, Mexico and the United States for international businesses. The ECB must authorize all purchases of more than 10% after a report from the Bank of Spain guaranteeing the solvency of the entities.
What effects does it have for BBVA in the short term?
Under current terms, with 50% of Sabadell’s capital, BBVA could receive dividends and consolidate accounts, but not carry out a merger by absorption until it received approval from the Ministry of Economy.
What was the last big merger?
The absorption of Bankia by CaixaBank.
