“BBVA’s change to takeover bid worsens the offer”

New notice from the management of Banco Sabadell to its shareholders. The organization’s president, Josep Oliu, warned that the adjustments BBVA made this week in exchange for Sabadell are “absolutely neutral” and “worsen the offer.” At a meeting with the bank’s shareholders in Barcelona, ​​Oliu said that the bank “creates great value for its shareholders as a whole”, recalling that it is the European bank with the highest revaluation of its securities in a year.

Oliu refers to the announcement made by BBVA this week of an adjustment to the exchange offer to transfer ownership in exchange for 5.0196 Sabadell and 0.29 euros in cash, which will be the amount of dividends it will distribute next week. This new exchange of one share instead of the previous 4.83 plus 0.29 euros in cash responds to the need to recalculate the value of the securities after the separate distribution of dividends by the two companies. “We gave eight cents, they worsened the exchange equation by those eight cents and only returned six,” said Banco Sabadell CEO Cesar Gonzalez-Bueno, who said the scenario he considers most likely is that the process the takeover will be decided in the second quarter of 2025, “although this could extend even into the summer.”

The company’s president considered that “the market has come to agree with us on the reasons why the board of directors rejected the takeover bid” as BBVA’s valuation of Sabadell shares fell from €2.22 at the start of the takeover bid to €1.84. euro now due to the volatility of the shares of both companies. In this regard, he explained that Sabadell’s share has increased, given that 85% of the bank’s business is in Spain, while BBVA’s share has fallen, since it has a 60% stake in Mexico, a market in which it has depreciated.

The ball is now in the court of the National Markets and Competition Commission (CNMC), which must assess the impact that the takeover bid will have and its consequences for both companies, as well as for shareholders, customers and the banking market. All indications are that the regulator will not decide the case in the so-called first phase – when the operation is simple and practically agreed upon – and will not make its decision in the short term. Sources consulted by LA RAZON assure that the analysis will move to the second stage because “there are many implications affecting the market, especially on SMEs rather than individual clients, which makes the process much more complex due to the impact on competition.” If this scenario materializes, a third phase will be opened in which the government will have 45 days to evaluate the possible conditions put forward by the CNMC to green light the operation, tighten them, lower them or leave them unchanged.

Oliu wanted to make it clear that he was ruling out the possibility of the takeover bid succeeding for now, as the government had “already said very credibly that it was not going to give the go-ahead for the merger.” Therefore, he explained, Sabadell shares will continue to be listed on the stock market, but “with a majority partner” who will be able to raise issues at the general meeting. He also insisted that “only with the consent of more than 90% of shareholders will BBVA be able to carry out a non-takeover bid on the same terms as the previous takeover bid and be able to obtain 100% of the shares”, since otherwise the shareholder would have to hold a majority of the shares negotiate with minority shareholders about a possible merger, “and they will have to pay for it. So, most likely, nothing will happen.”

Both leaders once again demanded that BBVA be transparent in the operation and “not hide any information.” The President took the opportunity to remind that BBVA is “charged as a person in a criminal proceeding” and that “the outcome of that charge, if he pleads guilty, could also have a material impact on the stock price.” Oliu refers to the fact that the National Court proposed to try BBVA and the organization’s former president Francisco González for bribery and revealing the secrets of hiring companies linked to former Commissioner José Manuel Villarejo between 2004 and 2016.

Concluding the event, Oliu wanted to publicly support the work that Gonzalez-Bueno has done since he joined the organization and recalled that the bank’s board rejected BBVA’s merger proposal. “I am confident in the project and in the bank’s management team led by Cesar,” he assured. “He did an outstanding job” changing the bank’s strategy, resulting in Sabadell’s capital adequacy ratio and profitability exceeding 13%.