Sabadell’s takeover bid slows and already exceeds first deadline set by BBVA | Companies

The takeover bid for Sabadell is already taking longer than BBVA expected. When the Carlos Torres-led bank made its hostile bid on May 9, it expected to receive all regulatory approvals within a maximum period of five to six months. That deadline expires this Saturday, November 9, six months after BBVA filed its takeover bid, but BBVA has not achieved the targets it originally set for that date. This is primarily due to the delay in the issuance of regulatory opinions, primarily the National Markets and Competition Commission (CNMC) and the National Securities Market Commission (CNMV).

The passage of time is not trivial for BBVA, since along with the takeover flank, it will face another flank in Mexico. The bank is suffering in the stock market due to the fall of the peso, especially after the election of new President Claudia Sheinbaum and the diplomatic conflict that began with Spain during her inauguration. All of this was exacerbated by the election of Donald Trump last Tuesday. The peso has lost 18% since the elections in Mexico and BBVA, 16% since the first rumors of his intention to seize Sabadell became known. Mexico is BBVA’s first market and accounts for 44% of its gross profit and also represents high capital sensitivity (10 basis points in CET 1 ratio). fully loaded for every 10% weight loss). The bank’s progress in the stock market thus depends on developments in Mexico, as well as the ability to improve its takeover bid without resorting to a capital increase. The rationale for the Sabadell proposal is precisely to try to increase the weight of the Spanish market in BBVA’s accounts and dilute the Mexican market.

The recent US election results haven’t helped either. A recent report from Barclays indicated that BBVA would suffer under a Trump presidency due to his immigration policies and tariffs that would weaken the peso, while making it clear that Harris would provide price support. Citi also ranks it among the European banks most sensitive to election results. Sabadell shares suffered a similar decline to BBVA shares last week, showing that investors are correlating one company’s price with another, at least until the future of the takeover bid becomes clearer.

In Spain, of the three approvals that BBVA had hoped to receive before this Saturday, only that of the European Central Bank (ECB), which in September said it would not oppose the deal. The next milestone comes at the CNMC, which is expected to give its first verdict next week at its council on Wednesday. The competition could authorize the operation in the first stage by confirming the proposed obligations sent by BBVA, which are based on those applied in the merger of CaixaBank and Bankia, such as the protection of commercial conditions in exclusive zones or a special regime for SMEs. It may also, given that the takeover bid raises competition concerns, expand its analysis to the most rigorous route, known as stage two.

Although the CNMV was only required by law to wait for the ECB’s decision and could make a decision at any time, the CNMV would, as expected, wait for the CNMC’s decision. BBVA, in a presentation it made hours after filing its takeover bid, said its preliminary timetable included obtaining those approvals within five to six months. Once the CNMV gives its approval, a period of 15 to 70 days will begin during which Banco Sabadell shareholders will decide whether or not to go ahead with the takeover bid. If this regulator makes a decision before the competition, the holders of securities of the Catalan bank will be forced to make a decision without knowing the opinion of the CNMC.

BBVA expected this acceptance period to be extended until eight months later, when the takeover bid should be fully completed. On paper, this deadline can still be met. If the CNMC authorizes the transaction next week (which is expected to be unlikely) and the CNMV does the same a few weeks later, BBVA would still be able to meet that second deadline of January 8, provided it decides on the deadline accepting the transaction. short absorption

The market expects CNMC to choose the second stage. This, according to forecasts, may disrupt all deadlines, given that it will delay the conclusion of the Competition until the summer. In the second stage, the regulator must collect the opinions of various social actors, such as consumer associations, businessmen or autonomous communities. Moreover, this inevitably means that the takeover proposal enters the third stage, at which the Council of Ministers can expand or reduce the conditions imposed by the Competition. Given the government’s apparent rejection of the takeover bid, it is expected to make very high demands that will be difficult to meet. BBVA CEO Onur Genç already warned last week at a press conference that they may withdraw the takeover offer if conditions are imposed that affect the value of the deal.