The room for maneuver of a company that receives a takeover bid is very limited. Their actions “are necessarily quite passive,” say sources from the financial sector.
The heading of Chapter VI of the takeover law is called “Defenses against acquisition offers.” There are two articles, 28 and 29, that develop the room for maneuver that an entity that is the subject of a public acquisition offer has. The title of the first of them is a good summary to establish positions. “Limitation of the actions of the bodies and management of the affected company and its group.” There are no rights or duties, there are limitations.
The aforementioned article 28 prevents them from “agreeing or initiating any issue of securities that could prevent the success of the offer.” Nor can they “carry out or promote, directly or indirectly as much as may impede the success of the offer, operations on the securities that it affects or on others, including acts aimed at promoting the purchase of said securities.” Any movement of sale, lease of real estate or corporate assets that could impede the success of the offer is prohibited, as is attempting to gain the benefit of the shareholders with any type of extraordinary remuneration or that is not contemplated in the shareholder policy. .
There are only two ways to counter a hostile takeover like the one Sabadell has been subjected to. The first, almost a classic in the history of major Spanish takeover bids, is to look for competitors on the other side, in this case BBVA. What is traditionally known as a white knight. Try to choose a buyer that is considered preferable to the one that submitted the hostile takeover bid. He is a figure that took on special relevance in the Spanish media panorama during the fierce battle for Endesa, after the takeover bid launched in 2005 by the Catalan company Gas Natural (today Naturgy) for control of the electricity company in Endesa. After a succession of white knights, it ended up in the hands of the Italian giant Enel. This is the trump card that Banc Sabadell can use with the best chance of success if it wants to avoid the entry of BBVA into its control bodies.
The law also gives you another loophole, but much more complicated. It establishes that “the actions or operations that, after the announcement of the presentation of the offer, are expressly authorized by the general meeting of shareholders in accordance with the provisions of article 103 of the consolidated text of the Law of Public Limited Companies”, as contemplated Article 28. Specifically, Sabadell could, for example, promote a merger or spin-off of its own entity as long as it had the support of 50% of shareholders in a first call for its meeting or 25% in a second. But there is a problem, these decisions could only be approved by an ordinary general meeting and this was held on April 10; That is, it could not be convened for another year.
Meanwhile, financial sources consulted see “little progress” in the complaint filed by Sabadell before the CNMV in which it accuses BBVA of violating the takeover law. “It lacks definition and has not used the appropriate channels,” they say. Article 32 of that law establishes the obligation for companies involved in a takeover bid to “preserve information equality” for the entire market.
A period is established, the one between the moment of communicating the takeover bid and the moment of its execution, and some content, those referring to that offer, and calls for refraining from “disseminating or publishing by any means any data or information that is not included in the prior announcement of the offer.
Banc Sabadell believes that this article has been violated because BBVA communicated information to shareholders and journalists that was not contained in the initial communication of the takeover bid. It is up to the CNMV to resolve it.
