The refusal of the Board of Directors of Bank of Sabadell to accept the merger proposal offered by BBVA It puts the Basque bank in the dilemma of whether to continue with its purchase project or give up. And even more so when the Catalan bank emphasizes in its statement to the National Securities Market Commission (CNMV) that the “unsolicited, indicative and conditional” offer “significantly undervalues the project” and its growth prospects, which is why it prefers navigate alone, since “as an independent entity it will generate a greater value for its shareholders”.
In this scenario, the alternatives of the group chaired by Carlos Torres to take over Banco Sabadell are reduced to three, in the opinion of analysts. The first consists of improve the offer, which would imply a cash portion. The first proposal was 11.5 billion euros through a share exchange to acquire 100% of Banco Sabadell, a 30% more than its stock market value on Monday, April 29, one day before the news broke. That is, it offered one of your shares for every 4.83 of those of Sabadell, with the aim of creating the second bank of Spain and the third in Europeonly behind BNP Paribas and Santander.
It may interest you: Banco Sabadell says “no” to BBVA and rejects the Basque bank’s merger offer for the second time
Although BBVA improve your offerSabadell could decline it, indicates Juan José Fernández-Figares, director of Management of Collective Investment Institutions at Link Securities, since “the margin for this is not great.” He emphasizes that “the main reason for rejecting the operation was not the economic offer but rather a strategic one, since the bank has its own strategic plan that includes continue growing organically and probably through acquisitions. While BBVA’s operation is contrary to this plan.”
Another alternative that BBVA could opt for is launch a hostile takeover bid against Sabadell. A possibility that most analysts rule out because it is an unusual practice in the Spanish banking sector.
The third option is that BBVA give up your attempt to take over Banco Sabadell, which will leave the Basque bank in a delicate position taking into account that it has already been rejected twice by the Catalan bank. The first was in 2020 when he tried the same operation and ended up failing.
This new rejection, “not only damages BBVA’s reputation as a strategic actor in large operations, but also impacts trust of investors and potential partners,” he argues Sergio AvilaIG analyst.
In his opinion, BBVA must now redefine your growth strategylooking for new ways to expand and consolidate in the financial market, since “the lost opportunity for synergies and market expansion due to the unrealized merger adds pressure, while the future uncertainty “It can negatively influence team morale and investor confidence.” For this reason, he considers it essential that BBVA reevaluate your strategic path and prepare a compelling plan to address these challenges.
Whatever roadmap you take, BBVA does not have it easy, and even less so when the Catalan bank is not willing to join the Basque bank, he acknowledges. Nuria Alvarez, Renta 4 Banco analyst: “The statement issued by Sabadell to the CNMV is interpreted the lack of predisposition to enter into conversations in a hypothetical case in which BBVA might be willing to improve the conditions of the offer. In this sense, we do not see room for a price improvement.”
For his part, Fernández-Figares is convinced that the Basque bank has already designed a new strategy to follow: “I am sure that They have a plan B and I don’t think Sabadell’s initial response surprised them. What I can’t tell you is what that plan is going to be, whether to upload your proposal or whether to launch a unfriendly offer and let the Sabadell shareholders be the ones to decide.”
Before making a decision, Sergio Ávila believes that BBVA must carefully evaluate both the organic and inorganic growth to maximize value for its shareholders. Besides, the investor pressure “could significantly influence the choice of strategy and, although a new merger proposal with Sabadell is not ruled out, BBVA could need time to re-evaluate and explore other options before a new attempt.”
