BBVA proposes today to increase capital to finance the takeover bid

The bank will issue 1.126 billion new shares if it manages to obtain a simple majority of its shareholders.

BBVA celebrates today the extraordinary general meeting of shareholders necessary to continue with the deal on Banco SabadellThe available data and the optimistic atmosphere at BBVA give an idea of ​​the acceptance that the bank hopes to obtain.

Los shareholders, gathered at the Euskalduna Palace in Bilbao, They must vote on whether to accept that the bank increases its capital to carry out the exchange of shares with Banco Sabadell. This capital increase will consist of the issuance of new BBVA shares, which will be delivered to Banco Sabadell shareholders who accept the offer. It will not entail any outlay on the part of BBVA shareholders. It is submitted for approval Issuance of 1.126 billion sharesequivalent to 20% of BBVA’s share capitalThe exact amount will depend on how many Sabadell shareholders participate in the takeover bid.

Based on the voting intentions of the eight major investors, it is assumed that the majority of the major shareholders will authorize the operation.. These include Norway’s sovereign wealth fund (Norges Bank Investment Management), California pension plans Calpers and Calstrs, the Florida SBA fundhe New York (NYC) pension fund manager, The Canadian Giant Canadian Pension Plan Investment Board (Cppib), British Columbia Investment Management (BCI) y Calvert Investments.

The ‘proxies’ say ‘yes’

ISS y Glass Lewisthe main voting advisors of the large institutional investors have been waiting for weeks recommending a vote in favor of this transaction. Although some have even warned that BBVA may not obtain all the regulatory authorizations.

ISSHe stressed that the positive vote on the capital increase “It is well deserved for the convincing strategic sense of the combination with Sabadell”. He proxy He added that the merger between banks would allow “advance the process of consolidation of the banking sectorand more specifically in Spanish.”

Glass Lewisdespite describing the takeover bid as a “unique mess”, recommended approving the capital increase given that the operation “seems strategically coherent.”

The voting advisor highlighted the potential upward movement of shares among the various reasons why BBVA shareholders should approve the capital increase.

The bank will be given the green light to go ahead with its plan if the deal is approved by a simple majority. In the event that the quorum is between 25% and 50%, the support of two thirds of those present and represented will be required.

In ordinary meetings, BBVA’s percentage is usually around 60%.

Carlos Torres, Chairman of BBVAhas insisted on numerous occasions on the “benefits” that, in his opinion, the operation has. The takeover bid and the subsequent merger with Sabadell has the frontal opposition of the Governmentwhich believes that the merger between entities could generate “harmful effects” on the national financial system.

The Executive detailed that The merger would increase banking concentration, limit the banking offer and affect territorial cohesion.

BBVA insists that the operation “is good for Spain.” “The resulting entity will be larger, will have greater profitability, and that translates into a larger tax base,” Torres said in the presentation of the takeover bid.

In addition to the contribution on the Spanish economy, the president of BBVA has stressed in recent months that a larger-scale entity increases its competitiveness in Europe.

Onur Genç, CEO of BBVA, He explained during the presentation of the takeover bid that one of the bank’s main interests is to increase its local business.

BBVA’s top brass believes that the merger with Banco Sabadell makes sense given that They are “complementary businesses.”

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