BBVA informed Sabadell that it was “not possible” to improve the merger proposal “in economic terms.”

BBVA made public this Wednesday in a message from the National Securities Market Commission (CNMV) the letter that its president Carlos Torres sent on May 5 to his Banco Sabadell colleague Josep Oliu, informing him of the lack of “space”. ” to improve “economically” the merger proposal.

“I am writing to you in response to the email I sent you last Tuesday, in which I attached our proposal with the terms of the merger. I understand that you are assessing this exhaustively to give us an answer, and in this sense, I believe it is very important that your board of directors knows that BBVA does not have the opportunity to improve its economic conditions,” reads the text sent by Torres.

Banco Sabadell rejected the merger proposal on the grounds that it “undervalued” its project: “it believes that the proposal significantly undervalues ​​the Banco Sabadell project and its prospects for growth as an independent entity.” Furthermore, its “board (of directors) has full confidence in Banco Sabadell’s growth strategy and its financial objectives” and that “as an independent entity it will create greater value for its shareholders.”

BBVA released the full contents of the letter sent by Oliu, insisting that its offer had “exhausted all available space” and that it could not offer a higher premium, recalling that its market capitalization had already dropped to 6,000 million euros.

“We have already exhausted all the space available to us in our offer, maintaining a premium of 30% despite the significant relative rise in your shares from mid to 29 April. Moreover, since last Tuesday, the market has also made it clear that this is the case. There is no further increase as BBVA’s market capitalization declined by more than €6,000 million during this period. This situation absolutely does not allow us to pay more premium than we already offer, because if we did, it is foreseeable that our value would fall again (even by an amount greater than the premium increase we made),” Torres – Oliu emphasized.

BBVA proposed a merger by takeover of Banco Sabadell with an exchange of 1 newly issued BBVA share for every 4.83 shares of Banco Sabadell, assuming that neither company would pay dividends, reserves or any other distributions to their respective shareholders.

In addition, it is clarified that three members of the current board of directors of Banco Sabadell, selected by common consent between both parties, will be proposed to be included as non-executive directors on the board of directors of BBVA at the time of the merger. One of these directors will be proposed as one of the vice presidents of the BBVA Board of Directors.

An attempt at integration had already been made four years ago, at the height of the pandemic, but, as it turned out, it did not take place because they did not agree on the valuation of the shares.