BBVA - Banco Sabadell: door-to-door and call after call to convince shareholders

BarcelonaCalls, advertising, emails, calls to informational meetings... The activity is frenetic. BBVA and Banc Sabadell are accelerating their efforts to convince shareholders within the framework of the Basque bank's takeover bid for the Catalan bank. One to attract the maximum number of Sabadell shareholders and the other to prevent capital flight. The acceptance period ends on Friday, October 10, although depending on the outcome, the process could extend beyond November.

These actions aimed at attracting shareholders are in addition to the hiring of law firms, consulting firms, advisory firms, investment banks, and others, which will be diluted in the total expenses of both banks. "These are costs very typical of a hostile takeover bid, in which one attacks and the other defends, and they are not usually detailed," say experts consulted.

In the current situation of this story, BBVA is proud of its position. after the third shareholder and director of Sabadell, the Mexican businessman David Martínez Guzmán, distanced itself from the other fourteen members of the Catalan bank and announced that it would participate in the takeover bid. BBVA Chairman Carlos Torres took only a few minutes to declare this decision a victory: "It is a clear demonstration of the enormous appeal of both the offer and the merger project with BBVA, compared to Banc Sabadell's project alone," he emphasized, insisting that the takeover bid is "a unique opportunity."

Many analysts agree that the Mexican investor's move has been a significant boost to the company's image. Another issue is that it has a pull effect and has attracted many shareholders, especially the smaller ones, who account for around 40% of Sabadell's capital and many of whom are also clients. "Some clients with a significant stake have been invited to a meeting and tempted, but they have ultimately decided to follow the opinion of the majority of Sabadell's board of directors," say market sources consulted. "I don't think the smaller shareholders will join in," others assert.

BBVA has organized tours throughout Spain to attract Sabadell shareholders. This Thursday, it held one in Oviedo and has others planned online. And it has been holding meetings with potential Sabadell shareholders for weeks. But it uses all channels. "They called me, and I'm not a BBVA shareholder, but I am a Sabadell shareholder. When I asked how they knew my phone number, they hung up on me," says one businessman. The flood of publicity has led to some anecdotes, such as a BBVA advertisement about the takeover bid in Catalan next to the Bernabeu metro station in Madrid, distributed by someone via X.

Sabadell assures that its shareholder meetings "are recurring" and, therefore, routine. The most recent have been held in Madrid, Asturias, and the Basque Country. Its strongest locations are, in addition to Catalonia, the Valencian Community, Asturias, and Galicia. On Wednesday of this week, investor relations department member Gerardo Artiach held one of these meetings. On the same day, CEO César González-Bueno; CFO Sergio Palavecino; and head of investor relations Lluc Sas held another one in London with analysts and investors (Sas has another one this Friday), and next Monday, a virtual meeting with shareholders will be held with Chairman Josep Oliu and the CEO.

The fact is that many analysts believe it will be easier for BBVA to reach 30% or slightly more than the 50%+ target it is aiming for. "Things are tight. It's a matter of scraping together the best way to attract the maximum number of shareholders," say sources consulted by ARA. If the takeover bid closes with between 30% and 49.99%, BBVA will have to launch a second takeover bid when the first bid deadline expires. Furthermore, it must be in cash and at a price determined by the National Securities Market Commission (CNMV).

And this is a scenario with negative connotations. "If BBVA only achieves around 30%, it will prevent any third party from launching a takeover bid, and Sabadell will only have to wait for its main shareholder to secure the majority of the capital in the future," say the analysts consulted. The Spanish government established as a condition that both banks operate independently and that there be no merger for at least a period of three years, which could be up to five.

Sabadell warns that the exemption from paying personal income tax, as it is a share transaction following the improved offer, will only occur if BBVA obtains more than 50% of Sabadell. It also warns that there is a high probability of a second takeover bid at a better price, which discourages people from participating in the first bid.