The possibility of an improvement in BBVA’s offer for Banco Sabadell became a little more distant yesterday after the Catalan bank registered with the National Securities Market Commission (CNMV) the letter sent by the president of BBVA on Sunday, Carlos Torres, to his Sabadell counterpart, Josep Oliu. “BBVA has no room to improve its economic terms”, asserted the president of BBVA, who also warned that the market is not willing to pay more for Sabadell.
This market (the stock market) did punish Sabadell yesterday (the share fell by more than 4%) after understanding that the possibility of launching a hostile or friendly takeover of the entity is complicated. The shares are now trading at 1.80 euros, still above the 1.73 euros they were at before BBVA’s intentions were published.
Some analyst reports that were published yesterday, such as that of Autonomus, were along these lines. “We doubt that BBVA will attempt a hostile offer, so this is where Sabadell’s second purchase attempt will most likely end”, after the attempt in November 2020, says the report.
Torres’ letter was sent on Sunday, reports El Mundo. It was the day before the meeting of Sabadell’s board of directors in which it was decided to reject the proposal. BBVA stated at the meeting that it could not “pay more premium” than what was already offered. It was all or nothing.
In the text, the executive also acknowledged the wear and tear that BBVA’s share price has suffered since the announcement of the merger proposal. “Since Tuesday, the market has also made it clear that there is no further possibility of an increase, since BBVA’s stock market capitalization has fallen in the period by more than 6,000 million”, he pointed out.
Faced with the fall of Sabadell, the BBVA share is recovering the losses it has suffered these days on the stock market, so that the positions return, at least partially, to those prior to the announcement of the proposal. Yesterday it rose by 0.9%, to 10.29 euros, still below the 10.90 euros of April 29. It is normal that the fall of the last few days, which is a consequence of the purchase announcement, is compensated by the disappearance of the merger option.
Oliu had already maintained previous initial contacts with his counterparts at the bank of Basque origin and about which they had warned the Bank of Spain before it communicated to the CNMV, as reported by La Vanguardia. According to sources familiar with the process, BBVA made initial contact with Banco Sabadell in mid-April about the possibility of resuming the merger talks called in 2020. The intention was to start a more leisurely process so that the operation matures. However, when the British channel Sky News advanced the information on April 30, the CNMV made a request to BBVA, which had to recognize its plan and prevented it from opening a negotiation.
Sources indicate that BBVA also held a board meeting in mid-April in which this issue was addressed. They also claim that before the presentation of Banco Sabadell’s quarterly results, BBVA asked the Catalan bank to hold a meeting on this matter, without at any time negotiating.
Banco Sabadell is pushing ahead with the agenda and yesterday a series of meetings with analysts and investors began in London to inform them of the results of the first quarter. It is taken for granted that in these meetings the attention of the investment community will continue to be focused at least in part on what has happened these days.
Yesterday both the Minister of Economy, Carlos Cuerpo, and the leader of the opposition, Alberto Núñez Feijóo, agreed to distance themselves from the plans of BBVA and Banco Sabadell. Their messages are about “respect” for decisions and attention to the competition environment, which is one of the elements that have generated the most concern these days among employers.
The president of the National Markets and Competition Commission (CNMC), Cani Fernández, revealed yesterday that BBVA contacted the regulator last week, in full supply, to report the effects of the operation. It was, he said, a “courtesy contact” made by “the parties” without further implications, since their teams cannot begin to analyze an operation of this nature until there is a binding agreement.
The criteria of the CNMC in the face of an eventual high concentration operation in the banking sector would be similar to that applied both to the file of CaixBank and Bankia and to that of Unicaja and Liberbank. The methodology consists of studying market by market and zone by zone, as well as the “necessity and proportionality” tests. The aim is to know the intensity of the competition in each case, without the intention of “obstructing the business task”.
