BBVA announces a record dividend to attract Sabadell shareholders

BarcelonaBBVA has decided to go all out to attract Banc Sabadell shareholders in order to take control of the Catalan bank. The bank's board of directors, chaired by Carlos Torres, has approved a dividend of 32 cents, the largest in its history, which will not be paid until November 7th, on account of this year's results. The result of the takeover bid launched in May of last year, which is now in the final stages of the acceptance period, will be known by then. After deducting personal income tax, the net dividend amount is €0.2592.

In the midst of the process to attract shareholders to the Valle del Cauca bank, BBVA emphasizes that Sabadell shareholders who accept its proposal "will also receive this dividend, given that the payment will materialize after the settlement of the takeover bid." This remuneration, the Basque bank adds, represents a 10% increase compared to the 29 cents offered the previous year. Some analysts consider this measure a "disguised" improvement in the offer, although it is also clearly aimed at BBVA shareholders.

Although the blue-chip bank links the success of the transaction to obtaining at least 50.01% of Sabadell, it remains open to settling for a stake of between 30% and 49.99% of the share capital. This, however, would require it to launch a second all-cash takeover bid, which could drag the process out beyond November. Financial sector sources maintain that the bank is struggling to attract support for the takeover bid. Small shareholders—many of them Sabadell customers—account for just over 40% of the capital and among them are many opponents of the operation. Among the institutional shareholders is the insurance company Zurich, which holds 4.947% and is also opposed to the transaction, as well as other funds that believe the price undervalues the Catalan bank.

New rejection

This announcement of a new dividend comes as Banc Sabadell's board of directors is scheduled to issue its opinion on BBVA's 10% increase in the offer this Tuesday, on the last day of the deadline for doing so. Based on the statements from its board of directors, the latest from the chairman, Josep Oliu, in an interview in ARA Last week, they will again reject the Basque bank's proposal.

Financial market sources affirm that Sabadell's planned remuneration plan remains attractive. In addition to the 7 cents per share paid in August, it will distribute another interim payment in December, a complementary payment in March or April, and an extraordinary payment for the sale of the British subsidiary TSB to Santander. The total is €1.3 billion for this year's results and €2.5 billion for the sale of the subsidiary. The goal is to reach €6.3 billion by 2027. BBVA, for its part, pledged to distribute €36 billion to shareholders through 2028.

The change in the offer announced a week ago—which offers the Catalan bank's shareholders one new BBVA share for every €6 in the takeover bid—is a significant step in the face of the growing interest in the Spanish bank. The acceptance period will now end on October 10th, instead of the 7th as originally planned. Many analysts believe BBVA was shortchanged and should raise its offer by 30%.