Oliu warns Sabadell shareholders of the consequences of the Villarjo affair if they take part in BBVA’s takeover bid | Companies

Banco Sabadell used its powerful atomic weapons against BBVA in a hostile takeover attempt. The Catalan bank’s president, Josep Oliu, warned in a meeting with the bank’s shareholders that if they accepted the Basque bank’s offer, they would ultimately have to face the risk of legal action due to criminal proceedings against BBVA in the Villarejo case. “This accusation, if it materializes, could affect the share price,” the Catalan banker said.

The judge proposed recognizing BBVA as a legal entity for its orders to the retired commissioner, but the bank appealed the decision. If the National Court confirms that the bank should go to court, the Anti-Corruption Prosecutor’s Office will file an indictment as a preliminary step for the bank to appear in the dock. A lawsuit against BBVA may arise in the middle of the takeover process or immediately after it.

“The people from BBVA came here because they wanted to. Those from Sabadell only if they decide to go. “If they go ahead with a takeover bid, they need to know what they’re exposing themselves to,” he said.

Both Oliu and Gonzalez Bueno have written to the bank’s shareholders to pour water on the BBVA takeover bid. Besides the risk of hiring a retired commissioner, both executives highlighted the doubts raised by the takeover bid. Among them, they mentioned the uncertainty of whether the National Markets and Competition Commission (CNMC) will approve the operation in the first stage or defer a decision in the second. This, Oliu said, could come in December, so the period for shareholders to decide whether to accept the offer or not would be in December at the earliest. If he moves on to the second stage, the deadline will be extended even further. The Catalan bank’s position is that a second stage is necessary due to the level of SME concentration, as well as statements from the government and civil society associations.

Therefore, Oliu said they are requiring BBVA to detail in the takeover prospectus, which must first be approved by the National Securities Market Commission (CNMV), this uncertainty, as well as other issues that he considers unclear regarding the offer. He also focused on the costs of restructuring, as well as the possible commercial implications of a takeover bid or the capital implications of the breakdown of alliances.

“This is not a traditional takeover bid, a traditional takeover bid is on a cash basis,” Oliu said, which he used as one of the arguments for why the board rejected the merger proposal that BBVA proposed to them on April 30. that it was a completely exchange-traded offer, which, in his opinion, adds a volatile component to the offer. He explained that if at the time of the proposal the premium was 30%, today it is 3%. “The situation has changed radically because Sabadell shares are 85% Spanish and 15% UK; BBVA is 60% Mexico, 30% Spain, and the rest Argentina, Turkey… Mexico devalued the currency and the banks fell 30%,” he said.

“The refusal was based on the fact that management had fulfilled all plans. For BBVA, we took into account forecasts regarding its future development and expected earnings in 2024, 2025 and 2026. We concluded that the bank had greater value on its own than accepting a merger proposal that involved the disappearance of the bank. We have highlighted the loss of value of the franchise, franchise expansion and customer relationships, this reputation, value and tax savings will be lost. This was not taken into account, only the proposal and results with the implicit bank and the assumptions of the bank itself. Even so, the value of a solo project was greater,” he said.

Oliu also explained the adjustment in the takeover exchange following Sabadell’s eight-cent dividend payment this week, as well as the adjustment that will be made when BBVA makes its promised 29-cent payment. According to him, this movement does not mean an improvement in the takeover price, but is neutral or even worsens it. “As suggested in the BBVA proposal, when we pay dividends in cash This is discounted in value and changes the equation of exchange. If it were 4.83 items, taking into account the weighted average price of 2.12 euros minus eight cents, the exchange equation would be 5.02. On the other hand, they have an obligation: if they pay dividends, they must also extend to the shareholders of Banco Sabadell. They pay a dividend of 29 cents, which divided by five equals six cents. They are given in a box because it is specified in the offer. They take eight cents out of the exchange equation and give us six in cash,” he explained.