The Sabadell takeover bid premium remains below average since the offer began, after adjusting for BBVA’s dividend.
On Tuesday, after the market closed, BBVA announced an adjustment to the exchange proposed in the takeover bid for Sabadell shareholders after both companies officially announced the amounts of BBVA’s next dividend and the one Sabadell just paid. Thus, the exchange ratio, which until now was 4.83 Sabadell shares per BBVA, becomes 5.0195 Basque titles for every Catalan.
This new equation takes into account that Sabadell will soon make a payout of 8 cents per share and that BBVA will do the same with a dividend of 0.29 euros after increasing its remuneration by 81% compared to the same payment last year and thus , guaranteeing largest payout in its historyfrom 1.7 billion. These dividends will be distributed on October 10, with the 7th being the last day to acquire the right to receive.
In addition, the investor is interested in whether this will change the premium that would be received as a result of a successful takeover bid. And the answer is no. Current difference is 3.3% depending on the share price of both banks, to which we must add the dividend of 0.29 euros that BBVA now promises Sabadell shareholders in cash, but which will be deducted from the share price next week. Therefore, the only difference is that they will receive part of the remuneration in cash, and not all in shares, which, however, has been demanded by the Barcelona side in recent months.
This premium of 3.3% remains below the average premium that has been maintained in the market since the takeover bid was launched on 1 May, which is 5.7%. Thus, it can be said that at present the attraction of visiting this place is not most noticeable. “The adjustment made in the exchange maintains the economic terms of the original offering but includes a small cash payment equivalent to the dividend that BBVA will pay next week. This move, we understand, is aimed at gaining approval from Sabadell shareholders and ensuring greater success. operations,” they explain in “Rent 4.”
BBVA is therefore trying to convince Sabadell’s minority shareholders to accept the exchange equation, but the total payout seems insufficient to us and our arguments are as follows: the new exchange equation implies a valuation of Sabadell shares at €1.85. Thus, the new supply is not improved. general offer,” Bankinter notes. “It should be remembered that BBVA’s original offer valued Sabadell at €2.25, but BBVA’s price has since fallen by more than 14%, so the current valuation is below target prices,” they continue. “We believe it is highly likely that Sabadell’s management team will improve management results for 2024 and 2025 and the expected reward to shareholders when reporting results for the third quarter,” they conclude.
Potential more than 20%
The public operation still has a long way to go until all major parties give their approval and finally begin seeking acceptance from Sabadell shareholders. When this happens, analysts give both companies potential more than 20% from their current levels at a time when rates are still above average over the past two decades.
However, research houses are more likely to recommend that investors enter through Sabadell, to whom they give buying advice compared to the service BBVA receives.
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