The Spanish stock market’s verdict on the rejection of the latest bank merger yesterday was double, by avoiding punishing Sabadell (it only fell 0.5%, to 1.88 euros per share) and by rewarding BBVA for not undertaking, at least for the moment, a purchase that causes overexertion (it rebounded 3.6%, to 10.20 euros). From today everything can change, since many analysts believe that there will be a second assault by the bank chaired by Carlos Torres, but this time offering cash. BBVA remains silent and the market tries to fine-tune its shot while making its speculations.
The fact that Sabadell remains above the price prior to the offer (8%) may be due to investors trusting the solo strategy or because they are expecting a counteroffer. Analysts do not question that Sabadell can distribute the 2.4 billion euros via dividends to which it committed on Monday after rejecting BBVA’s proposal. A report by Alantra estimates that “Sabadell aims for 1.5 billion euros of net profit per year.” Jaume Puig, general director of GVC Gaesco Gestión, believes that Sabadell “has no problem remaining alone”, although he assumes that there will be a counteroffer. A part of the market also expects it because BBVA shares are still 6% below the level prior to the offer.
For Nuria Álvarez, from Renta 4, if Sabadell has maintained its grip on the stock market it is because the bank “has now been valued.” “BBVA has done the math” and, even if it was with a different intention, it has shown that Sabadell was trading below its potential. As for BBVA, investors are “waiting.” It rises in the stock market, but it does not recover all the lost value because there is still a probability of new movements.
This vision 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 size in Spain”, so the market awaits news. From XTB, Manuel Pinto assures that “this is not over yet” and that “it is hard to believe that BBVA does not have an ace up its sleeve.”
These comments reflect the state the market was in yesterday, dominated by conjectures and assumptions. Meanwhile, BBVA watches over weapons and does not go beyond the brief 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 directors.
The unknown now is whether BBVA will improve the proposal with a cash payment, if it will launch a hostile takeover bid or if it will withdraw. Of the three hypotheses, the first was very much alive yesterday in the analysts’ reports. 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 a path to an improvement 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 battle 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 evaluate the specific operation, that “it may be a good time to pay attention to what is the optimal level” of concentration in the banking sector, taking into account taking into account that “before it was below the European average and now it exceeds it.” “It is a question to analyze,” he added during his appearance in Congress and in response to the ERC spokesperson, Inés Granollers, who conveyed her concern about the level of competition in Spanish banking. It was the last appearance of Hernández de Cos in Congress, since next June his term as governor of the Bank of Spain ends.
