BBVA takes a breath after obtaining the support of banks and large funds for the takeover bid on Sabadell

Time is the big question that will decide who emerges victorious in the first hostile bid that has been presented in Spain in the last 37 years in the banking sector, although BBVA Chairman Carlos Torres sees his success closer. Ayer, to applause, the shareholders of the Basque bank approved by an overwhelming majority (96% of those present, equivalent to 68% of the capital) the capital increase that BBVA needs to carry out its takeover bid for Banco Sabadell. It will launch a maximum of 1,126 million new shares on the market, for up to 551.9 million euros, assuming that 100% of Sabadell shareholders decide to accept an offer that remains unchangeable: for every 4.83 Sabadell shares they will receive 1 BBVA share and they do not plan to complement it with cash.

“It is an extremely attractive transaction, a very powerful combination of the two banks that will create value for all our stakeholders, including, of course, our shareholders,” said Carlos Torres during his speech to the public who attended the Euskalduna Palace in Bilbao yesterday, at a meeting that brought together 70.75% of the bank’s capital.

In the terms in which the offer is being put forward today, it would be foreseeable that the major shareholders, including funds and investment banks, who share both entities and who have voted in favour at the BBVA Meeting will also go to the takeover bid once it is Sabadell’s turn to decide.expected to take place in the third quarter of the year. However, this will only be if the conditions are maintained, taking into account that this is an offer in shares and not in cash. “Time may make it more or less attractive,” Torres, aware of this, said last week in an interview in London with the agency Bloomberg.

The most obvious case is that of BlackRockhe megafund of American investment that has 9.7% of the capital of BBVA and 6.7% of Sabadell. But it is not the only one. It is estimated that The main institutional shareholders account for just under 20% of Sabadell’s capital. These include names such as Vanguard, Norges Bank, Goldman Sachs, Dimensional Fund and JP Morgan. who will also have a decisive vote once the acceptance period for the offer opens, although there is still a long way to go. This is what Josep Oliu, president of Sabadell, said, who wanted to send a letter to his shareholders 24 hours before BBVA held its General Meeting to remind them that “nothing” that happened in Bilbao yesterday should “presumably presuppose the success” of the operation.

MONTHS OF OPA

The OPA needs, first of all, the green light from the European Central Bank (ECB) which is not expected this summer, a priori. Sources close to the organisation recall how there have been similar processes in recent years that have taken up to 6 and 7 months. Once the Bank of Spain receives the go-ahead from Frankfurt, it will be the turn of the National Securities Market Commission (CNMV) which maintains fallow the prospectus of the offer since the end of May. Its approval does not necessarily require the ok Competition, which is dependent on the Government, since they are two processes that could develop in parallel over time. Even, It could happen that the CNMV gives the go-ahead to the operation and the Executive, which has expressed its opposition to the merger on many occasions, decides not to support it.This would result in the effective purchase of Sabadell by BBVA if it obtains the support of the shareholders, but would prevent the merger of both entities, with the consequent obligation to keep both brands separate.

This is one of the possible risks that BBVA did not consider yesterday during its presentation to its shareholders. That of the Government’s firm opposition to combining both entities. A second scenario is that the entity goes ahead with the takeover bid without sufficient support – it requires 50% plus one share of the capital to be successful. If this were the case, BBVA may be forced to launch a second, more attractive offer to those who decided not to go for the first oneto avoid an awkward situation: having control of the capital, but with a strong presence of minority shareholders, a decisive aspect in this operation. Many of Sabadell’s clients are also shareholders, specifically, around 78,000, which represents 38% of the total. Another 10% of the capital is in the hands of minority shareholders without banking ties.

“BBVA has wanted to give Banco Sabadell shareholders the power to choose,” Torres said yesterday during his speech, paraphrasing the latest advertising campaign launched by the Catalan entity. The bank figures Synergies of €850 million in cost savings over the next three years, while restructuring costs are expected to be 70% higher, reaching €1.45 billion gross.As regards the bank’s capital consumption, BBVA estimates the impact of the merger at 30 basis points, considering the integration of 100% of Sabadell. The rest of the figures foreseen for the other assumptions must be disclosed in the prospectus of the operation once it is approved by the CNMV.

BBVA is also committed to maintaining its current shareholder remuneration policy by distributing between 40% and 50% of profits through dividends, between cash and shares, with the commitment to distribute any excess over 12% of capital.

“This operation is a clear commitment to Spain and its SMEs,” Torres emphasized during his speech, taking into account the important role played by Sabadell in financing small and medium-sized businesses. “In addition to BBVA’s largest share in retail banking, we would add Sabadell’s largest SME business. Serving SMEs and self-employed workers is a fundamental priority for BBVA. These businesses account for more than 60% of the country’s employment and contribute decisively to its economic and social development.” BBVA alone has managed to increase its customer base by 51,100 in the first four months of the year among self-employed workers and small and medium-sized businesses.

Regarding the integration of the workforce, Torres promised to “preserve talent” and to maintain Banco Sabadell’s corporate headquarters in Sant Cugat (Barcelona) while maintaining “both brands” in some areas.

 
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