BBVA decides to continue with its takeover bid for Sabadell despite the sale of TSB.

BarcelonaBBVA decides to continue with the hostile takeover bid for Banc Sabadell despite the Catalan bank's decisions to sell its British subsidiary, TSB, and to distribute an extraordinary dividend of 2.5 billion euros to its shareholders, which left a more complicated scenario for the Basque bank. Carlos Torres's entity "has decided not to withdraw the offer" after analyzing the results of Sabadell's recent shareholder meetings, as it has communicated to the National Securities Market Commission (CNMV), and the offer "remains valid in accordance with the applicable regulations."

Sources at the Basque bank assure that BBVA "has decided to move forward and will update and publish all relevant information once it obtains the CNMV's approval of the prospectus, expected in early September." They also recall the words of BBVA CEO Onur Genç during the results presentation on July 31: "Our focus is on value creation," he warned. "We only invest capital if it makes sense from that perspective of value creation." For their part, Sabadell sources have limited themselves to recalling the words of CEO César González-Bueno at the extraordinary shareholders' meeting on August 6, in which he demanded that the prospectus be very clear and that "it must transparently state whether Banco Sabadell shareholders will receive 25% of the entity's value in dividends by 2027." In his opinion, with this information "we would have made enormous progress, because at the moment it does not exist and, therefore, is not comparable," he said.

TSB and the dividend

The decision to go ahead with the transaction comes as a surprise. Last week, Sabadell approved the sale of TSB to Santander at two extraordinary shareholders' meetings for €3.098 billion, which could end up being close to €3.400 billion when the transaction closes in the first quarter of next year. It also approved the distribution of €2.5 billion in dividends, a figure only 50% of which will benefit shareholders who do not participate in the takeover bid. These proposals were supported by 99.7% of those attending the meetings, reinforcing the shareholders' rejection of the takeover bid and opening the door to a possible withdrawal of the takeover bid by BBVA.

In fact, BBVA stated after these extraordinary meetings that, in accordance with the CNMV, they "could withdraw from the offer," but it has ultimately decided to go ahead. Until now, Carlos Torres' bank had not made a formal statement: only updated Last week, the Universal Registration Document (URD) was published, outlining the potential risk factors the bank may face in the short and medium term, including those associated with the hostile takeover bid it has launched against Banco Sabadell. Among the risks identified and linked to the takeover bid, if it fails, BBVA acknowledged that the bank's share price "could be affected or subject to fluctuations." Furthermore, the inability to carry out the takeover bid "would negatively affect the bank's reputation and could generate adverse reactions from investors and customers, as well as negatively affect BBVA's relationship with its employees and customers."

A possible improvement in the offer?

Now that BBVA has announced its decision to go all the way with the hostile takeover bid, there remains a possible scenario where Carlos Torres' bank improves its offer for Sabadell, although BBVA They have insisted that this is not going to happen"The offer is the offer," Genç asserted at the end of July. The bank can do so up to five days before the end of the acceptance period (the time Sabadell shareholders will have to decide whether to accept the offer).

All in all, BBVA's offer represents a negative premium for shareholders, which has widened further since the approval of the sale of the British subsidiary and the distribution of the extraordinary dividend. BBVA wants to acquire Banc Sabadell through a share swap: for every 5.34 Banc Sabadell shares, it is offering one BBVA share and a payment of 0.7 euros. Since the offer was submitted until now—15 months later—the shares of both banks have fluctuated: this Monday, Sabadell closed at 3.34 euros per share, while BBVA shares are worth 16.06 euros, so the premium remains negative—that is, shareholders would obtain greater returns by selling their income.

However, BBVA assures that "any other information regarding the transaction will be published in the prospectus filed with the CNMV," which they estimate will be in early September. Once the CNMV approves the prospectus, the acceptance period will open, which can be from 30 days to a maximum of 70.

For its part, Sabadell, which presented its new strategic plan on July 24 to demonstrate its viability on its own, earned profit in the first half of last year, in addition to announcing the payment of a first dividend on account of 2025 results of 0.07 euros as of August 29, which is part of the 1.3 billion euros planned for 2025, between dividends and the buyback of shares. Under this roadmap, Sabadell plans to reward shareholders with 6.3 billion euros in dividends and share buybacks between 2025 and 2027, a figure equivalent to approximately 40% of its current market value.