BBVA raises its offer for Banc Sabadell by 10%

Barcelona / Madrid"The offer is the offer," BBVA CEO Onur Genç had repeatedly insisted when asked about the possibility of improving What they offer to Banc Sabadell shareholders to accept the takeover bid. However, these words came to nothing on Monday.

After numerous denials, BBVA has finally contradicted its own words and modified its offer for Banc Sabadell. It did so just before the deadline to decide whether to extend the takeover bid acceptance period, that is, to give the Catalan bank's shareholders more time to vote. They had until October 7 to decide whether to participate in the takeover bid, but before this Wednesday, BBVA could have extended that timeframe. Now, the process is suspended until the National Securities Market Commission (CNMV) accepts the amendment to the prospectus with its new offer. It has up to three days to do so. In any case, BBVA has announced that it is waiving the extension of the acceptance period when it reopens, so the process will end when the planned 30 days are reached. Once the new prospectus is approved, the board of directors will have up to five days to issue a new opinion on the amended offer.

Until now, BBVA offered one new ordinary share and 0.70 cents for every 5.5483 ordinary shares of Sabadell. With this Monday's modification, the proposal is being shifted entirely to newly issued ordinary shares of BBVA, at a ratio of one ordinary share of BBVA for every 4.8376 ordinary shares of Banc Sabadell. This change, according to BBVA, improves the offer by 10% and the tax benefits for shareholders, and represents a complete about-turn in the fight to convince Sabadell shareholders to participate in the takeover bid. In the midst of the process, the Basque-based bank opened the door to giving up control of more than 50% of Sabadell and leaving it at between 30% and 49.99%, but in that case, it would have to launch a second takeover bid in cash.

According to BBVA, the fact that the entire proposal is now in the form of shares allows Sabadell shareholders residing in Spain to avoid having to pay taxes on capital gains if the Basque-based entity acquires more than 50% of the Catalan bank's capital. In fact, the tax blow It was one of the arguments that Sabadell used to defend itself from the takeover bid..

The entity chaired by Carlos Torres also assures that with the modification of the offer, it values each Sabadell share at 3.39 euros, as of the market close last Friday. The financial institution states that "the current equivalent value of the offer has increased by 60% since the day before the existence of merger talks was made public, on April 29, 2024, going from 12.2 billion euros to 19.5 billion euros currently." Sabadell specifies that the valuation with the current offer is 17 billion euros, since the 19 billion euros include the dividends paid by Sabadell since the takeover bid was launched.

No more offers

At the same time, BBVA has informed the National Securities Market Commission (CNMV) that it is waiving any further increases in the takeover bid consideration. BBVA is expected to submit its application for authorization to change the offer this Monday, along with a supplement to the takeover prospectus and a report from an independent expert attesting to the increased consideration.

Last Friday, Sabadell's chairman, Josep Oliu, and the bank's CEO, César González-Bueno, stated that none of the small shareholders who have deposited shares in the Valles-based bank had participated in the takeover bid. They also asserted that institutional shareholders were not convinced. In fact, the market had been speculating about this option for days, especially considering that the premium on BBVA's first offer had been in negative territory since January. This means that it was more profitable for Sabadell shareholders to sell their shares on the market than to participate in the takeover bid. According to the Catalan bank, the previous offer undervalued the entity and was between 30% and 40% of what it believed it should be.

The new offer, according to the bank chaired by Torres, "would grant Banc Sabadell shareholders a 15.3% stake in BBVA, thus benefiting from the enormous value generated by the merger of both banks: with the merger, they will obtain earnings per share (which determine the dividend per share) approximately equal to those of the bank, which would maintain its solo path."