The president of BBVA, Carlos Torres, assured his counterpart at Sabadell, Josep Oliu, last Sunday that “BBVA does not have any room to improve its economic terms” of the offer for the entity born in Sabadell. The letter arrived just the day before the Sabadell board of directors meeting in which it was decided to reject the proposal.
The communication was through an email, reports El Mundo. Sabadell has made the content of the letter public through a statement to the CNMV (National Securities Market Commission). At the opening of the session this Wednesday, Sabadell’s shares suffered a fall of close to 4%, while those of BBVA started with increases. The fall in Sabadell shares would show that investors have ruled out any possibility of improving the offer.
In the text the executive acknowledged that “since last Tuesday the market has also made it clear that there is no further possibility of an increase, since BBVA’s market capitalization has decreased in the period by more than 6,000 million. This situation absolutely prevents us from being able to pay more premium than what we already offer, because if we did, it is foreseeable that our value would fall again (even by an amount greater than the increase in premium that we would make).”
The president of BBVA indicated that “the messages received from investors and analysts these five days are equally clear in this sense, and therefore coincide with our analyzes regarding the economic impact of the operation for BBVA.”
In the letter, Torres added that “in our proposal we have already exhausted all the space we had, having maintained a 30% premium despite the great relative rise in your stock from mid-April to the 29th.” The executive took the opportunity to recall the contents of the offer: “the proposed exchange ratio (4.83x, equivalent to 2.26 euros per share at the time of making the offer) represents a significant premium of 30% compared to the prices of the April 29. But the premium is 48% compared to the prevailing prices when our Council considered it, in mid-April.
Financial sources explain that before the presentation of Sabadell’s quarterly results, BBVA asked Sabadell to hold a meeting. The same sources added that no negotiations took place and that the next move was to inform the CNMV that BBVA wanted to acquire Sabadell.
