Crédit Agricole and Amundi could be “white knights” to help Sabadell against BBVA’s hostile takeover bid

BBVA takeover bid for Banco Sabadellfirst friendly and then hostile, brought to the fore the figure of the stock market White knight, a company approached by another company that is the target of a hostile takeover with an offer to counteract it by acquiring shares from higher price.

The offer made by the Basque bank to the Catalan bank is to exchange action new BBVA release for everyone 4.83 shares Banco Sabadell, which is 30% bonus at the closing prices of both companies on April 29. But at today’s prices the premium will remain at 8-9%as BBVA’s share has fallen since the takeover bid was first announced, while Sabadell’s share price has risen.

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Thus, 2.23 euros per share at prices on April 29 is today about 2 euros per share, those that “seem very low to us. According to our calculations, the theoretical value of Sabadell shares will be approximately 2.50 euro“, calculates Antonio CasteloAnalyst at iBroker Global Markets.

Behind No means no board of directors of Sabadell to this proposal, considering that “significantly underestimates” of the bank’s project and prospects for its growth as an independent organization, analysts consider it “more than likely” that “White Knight” takes the stage and submit a proposal for a friendly takeover of a Catalan bank. “It’s more than doable,” he says. Sergio AvilaIG analyst.

He claims that the bank is presided over Josep Oliu improved its financial position and valuation, which “could attract other major players in the banking sector interested in expanding in Spain.” In his opinion, the “white knight” would offer “better conditions and retain the current management of the Catalan bank, ensuring an attractive alternative to a hostile takeover” He emphasizes that while there is no guarantee that this will happen, “current conditions make this opportunity viable“

For a “gentleman’s” proposal to be interesting in the eyes of shareholders, it must include bonus from 40% to 50% at the current market share price, which will improve BBVA’s supply by 30%, market sources say.

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In addition, “the payment structure should combine cash and stock, offering immediate liquidity and growth potential,” suggests Sergio Avila. In his opinion, this should also include clear commitments to continuity of operations, protection of employees and clients and “a transparent post-merger integration strategy to maximize synergies and minimize disruption.” These measures “will ensure that shareholders perceive the proposal as valuable, increasing the likelihood of its acceptance,” says the IG expert.

Analysts are already drawing pools on which organizations could become Sabadell’s “white knights”, and bets are placed on two: Crédit Agricole and Amundi.

Avila believes that Credit Agricole will be one of the candidates, given its interest in expanding its presence in the Spanish market and its recent acquisition of a 7% stake in fintech company Worldline. “This strategy shows that it is focused on growth in Europe,” he explains. As for the manager Amundi, claims that Sabadell has already established a relationship with it after the acquisition Sabadell Asset Management and form a 10-year strategic alliance.

“Both organizations could offer friendlier and more beneficial integration for Sabadell and its shareholders, which increases the likelihood of acceptance of the improved offer,” explains Sergio Avila.

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Regarding the “white knight” as one of the large Spanish banks, Antonio Castelo does not believe that he is currently qualified to carry out such an operation: “KaishaBank still digesting the merger with Bankia and I don’t see Santander moving forward in this direction.” As for the foreign bank, he also considers it “complicated”, although he admits that the ECB “would be happy if a cross-border merger took place.”

Another possibility is that Banco Sabadell seeks to merge with Spanish medium bank to gain muscle mass. The candidates in this case will be Unicaja or Bankinterdot Manuel Pinto, XTB analyst, despite the fact that “the main argument of the bank’s management in favor of rejecting the takeover offer is the exceptional potential of the enterprise to continue its independent activities.”

As for BBVA, it does not rule out that if Sabadell shareholders reject its hostile takeover proposal, “it will try to look for other alternatives on the national market.”

Although mergers of banks from different EU countries are not common, European Central Bank stands for them in order to create entities big and hard which can compete on equal terms with banks from other non-EU countries.

More and more European leaders are supporting this trend. The latest to voice support this week was the French president. Emmanuel Macron, saying the European banking sector needed more consolidation and did not reject the possibility of a bank in his country being bought by a European entity.

In an interview with Bloomberg, he was asked if he would allow Banco Santander will buy Société Générale, responded that “negotiating like Europeans means we have to consolidate as Europeans.” “Now we need to open that box and offer a single market approach that is much more effective.”

For now, BBVA, unaware of these possible moves, continues its hostile takeover attempt after Sabadell’s “no” in order to achieve its goal of exceeding at least 50% of the capital of the Catalan bank, in which institutional investors They are key.

Whether the operation will be implemented or not will largely depend on the decision taken in this regard by the large investment funds that have capital in Oliu Bank. Of these, 71 simultaneously own shares in BBVA and Sabadell, including BlackRock, Norges and Vanguard Groupwhich own 10.2% of Sabadell shares and 17.9% of BBVA shares.

American BlackRock Fund main shareholder both BBVA and Banco Sabadell, in which he controls 5.48% and 3.62% respectively, according to data from the National Securities Market Commission (CNMV).

In Sabadell, no investor exceeds 4% shares. After BlackRock, the Mexican investor stands David Martinez Guzman, owner of 3.49% of the capital. They follow him Fintech Europewith 3.1% of titles; Sizing Fund Consultantsfrom 3%, and Millennium Group Management, from 2.26%.

Some of these large institutional investors have already given “preliminary approval for the hostile takeover proposal,” says Manuel Pinto. The approval, which was also recognized by the President of BBVA, Carlos Torres, acknowledging that “we have received positive views from certain relevant shareholders.”