BBVA’s takeover bid for Sabadell is moving forward. This week, a group chaired by Carlos Torres will process a formal request for permission from the European Central Bank (ECB) and the National Markets and Competition Commission (CNMC). Under current rules, you have five days to start both processes from the submission of the takeover prospectus to the National Securities Market Commission (CNMV), a procedure that was carried out last Friday.
The market regulator, in turn, seven days from this date to verify documentation and, if necessary, check with BBVA if necessary before notifying the acceptance of the takeover offer. Approval of the prospectus will still take several months as it is subject to the approval of the ECB and the CNMC as BBVA shareholders approve extension at extraordinary meetingn capital required to complete the operation.
The bank offers a new title for every 4.83 Sabadell, bourse, which at current prices would require the Basque group to achieve a maximum increase of almost 20% to achieve 100% acceptance of the takeover offer. The bank determined the success of the transaction by achieving at least 50.01%.
The Bank will also seek approval from numerous foreign authorities, such as the UK Prudential Regulation Authority, for its subsidiary Sabadell TSB; as well as competition protection organizations in France and Morocco through representative offices and branches located there.
Regulatory approvals
BBVA estimates that both regulatory approvals will take about five or six months, although that will depend on the complexity the agencies see. When ECB support expected to the extent that it will analyze whether the transaction entails risks to financial stability and whether the future group is solvent. The first point is dropped, and both financial institutions have strong balance sheets and solvent banks.
The CNMC will have to analyze whether the merger of both banks will lead to distortions in competition to the detriment of the customer, as has been condemned by the relevant Catalan competition authority, various business associations, political parties and even the government. CNMC President Cani Fernandez has already warned that the new group will have to accept the same conditions as CaixaBank and Bankia when they planned their merger, or Unicaja and Liberbank.
The new BBVA-Sabadell will have a market share of 22%, lower than CaixaBank, but with headwinds in an already very concentrated market (both groups and Santander will receive 74% of the loan). The new group will work with 66.2% of companies valued between 1 and 100 million euros and 40% of self-employed and micro-SMEs in the country.
If the calendars considered by the bank are respected and the authorization process is not complicated, the approval of the CNMV securities prospectus will occur closer to Christmas. There will be an open takeover period of 15 to 70 days, and BBVA could even improve its takeover bid during this period, although that option has been ruled out today.
Catalan competition sees risks
Catalan competition authority ACCO sees risks in this operation due to the concentration it could cause. Thus, the report indicates that the market for providing loans to both companies and families Almost 85% of the provided volume will be concentrated in the first three banks. Moreover, there will be a horizontal overlap of markets, and the resulting organization will become the second operator in Catalonia in terms of the number of banking offices, which will lead to the disappearance of a competitor in the 149 municipalities of Catalonia.