The persuasion capacity of those responsible for the BBVA has been put to the test after launching its hostile takeover of Banco Sabadell, since there are many who have to convince of the benefits of the operation for it to go ahead. You must obtain authorization from the National Securities Market Commission (CNMV), the European Central Bank (ECB) and the National Markets and Competition Commission (CNMC)ensure that the shareholders of the Catalan bank go to the takeover and accept the offer and let the Government say yes. But before that, they have to get BBVA shareholders to approve in the extraordinary general meetingwhich will be held on July 5, the capital increase necessary to carry out the exchange of shares with Banco Sabadell.
To convince shareholders, Carlos Torrespresident of BBVA, has sent them a letter and a video in which he explains the operation and reiterates that it benefits them because it will generate a higher profitability, in addition to “they will be part of a stronger and more competitive bank.” In the letter, the bank gives them voting instructions at the extraordinary meeting or delegate their vote.
The capital increase that will be voted on on July 5 will be carried out through the issuance and putting into circulation of up to a maximum of 1,126,339,845 new ordinary shares of 0.49 euros of nominal value each, of the same class and with the same rights and obligations as the BBVA shares currently in circulation.
The final amount of the capital increase will depend on the number of acceptances that are received by the shareholders of Banco Sabadell and “will not involve disbursement any on the part of BBVA shareholders,” according to what sources from the Basque bank have stated on repeated occasions.
Torres indicates in the video sent that the expansion “will not involve disbursement any on the part of BBVA shareholders” and explains that the union of both entities will “reinforce” the bank’s positioning and scale in the Spanish market, while achieving “greater efficiency and profitability”.
He adds that for BBVA shareholders, it represents “a clear value generation. On the one hand, they will be part of a strongest and most competitive bank. And, on the other hand, they will achieve high returns on investment with a limited impact on the capital ratio.”
The video emphasizes that the operation will also generate value “for the customers, employees and society as a whole”.
The capital increase It is one of the necessary steps within the purchase offer to Banco Sabadell shareholders for 100% of the shares, which BBVA announced on May 9 with which it wants to “build a stronger and more profitable bank, capable of competing in an increasingly global sector with growing investment needs in technology and data.”
To this end, it has proposed to the shareholders of Banco Sabadell the exchange of one new BBVA share for 4.83 Sabadell shares. After the exchange and assuming 100% acceptance by Banco Sabadell shareholders, they will have a 16% participation in the Basque bank.
BBVA defends that this operation will have a positive impact on the earnings per share (EPS) from the first year after the merger of both entities and an improvement of around 3.5%once all the savings associated with it are obtained, which the bank estimates will be three years after the merger.
