BBVA plans to go ahead with its takeover bid for Sabadell if it obtains at least 30%.

BarcelonaBBVA's takeover bid for Sabadell is beginning to move again. The bank, chaired by Carlos Torres, plans to waive the requirement of holding a minimum of 50.01% (49.3% if treasury stock is not taken into account) if it obtains at least 30% of the voting rights.

This has been communicated to the US stock market regulator, the SEC, which has allowed it to "align the deadlines established in the laws that regulate the regime of public offerings of securities in both countries," that is, in the US and Spain, according to a communication from the National Securities Market Commission (CNMV) late in the day.

The condition means that, if it obtains 30% or less than 50%, BBVA must launch a takeover bid for the remaining capital, and, in principle, it should be in cash. And this, which would further complicate a transaction surrounded by controversy since its announcement almost a year and a half ago, should be announced a maximum of one month after the end of the takeover acceptance period.

The offer prospectus, which BBVA will soon send to the CNMV for approval and the start of the shareholder acceptance period, will state that the Basque bank can waive the minimum acceptance condition. It will also describe the procedure for waiving that condition under Spanish law and will analyze in detail the potential impact of waiving that condition, according to BBVA.

Political and economic opposition

That takeover bid was a real shock from day one. During this time, the operation, announced just three days before the regional elections in Catalonia, has provoked opposition from the board of directors of Sabadell, but also from the Spanish government and the Generalitat (Catalan regional government), as well as from a large part of the Catalan economic and business community.

Despite the setbacks, BBVA had already announced that it was moving forward with its project, both after the Spanish government placed restrictions on the operation and after that Sabadell shareholders endorsed en masse At the beginning of August, the sale of the British subsidiary TSB to Banco Santander.

In addition, BBVA opted to appeal to the Supreme Court The Spanish government's conditions, which are specified in the prohibition of a merger between the two entities for three years, which could be up to five, a limitation established after the National Commission of Markets and Competition (CNMC) approved the operation. Pedro Sánchez's administration even called a public consultation to gather opinions on a possible merger of the two banks and how it could affect public interests.

The Basque-based bank, which already attempted a similar transaction in 2020 and failed due to a lack of agreement on the price and power distribution, has had to adjust its offer three times to the dividends that Sabadell has been distributing to its shareholders. The most recent occasion was last week, when the bank chaired by Josep Oliu distributed 370 million euros to shareholders, at a rate of €0.07 per share (€0.0567 net, after tax withholdings). This measure has also been communicated to the SEC, which has authorized it.

Last week's dividend is part of the €6.3 billion that Sabadell plans to distribute both in cash and through share buybacks between 2025 and 2027, the dates of its new strategic plan. It includes an extraordinary dividend of €2.5 billion from the sale of TSB (50 cents per share) – massively ratified by shareholders in early August – and which will be distributed in early 2026.

BBVA set a threshold to exceed (49.3% if treasury stock is not taken into account), a requirement it is now willing to avoid. The key to the success of the operation lies in the hands of institutional investors.

BlackRock at the helm

BlackRock, which this week surpassed 7% of the capital and is also BBVA's largest shareholder, has consolidated its position. as the first individual holder of Sabadell titlesThe bank has around 200,000 small shareholders, many of whom are also customers, who hold more than 50% of the capital. The reason why it is said that the vote could be tight is because minority shareholders do not approve of the takeover bid. This opinion has been expressed by organizations such as the Association of Minority Shareholders of Banc Sabadell, chaired by Jordi Casas.

There is one important factor currently tipping the balance in favor of those who oppose the takeover bid. The reason is that since last January, BBVA's offer price has been below Sabadell's market share price. As a result, it would currently be more profitable for Sabadell shareholders to sell their shares directly on the market than to participate in the takeover bid. This leads most analysts to expect the Basque bank to improve its offer, something that the bank's management has denied on several occasions. BBVA has options to improve the offer up to five days before the end of the takeover bid period.

BlackRock, with 7.022%, is ahead of the insurer Zurich (4.700%), the Mexican investor and entrepreneur David Martínez (3.495%, which he majority controls through Fintech Europe), Dimensional Fund (2.873%), UBS,2 Goldman Sachs (1.490%), Vanguard (1.338%), Amundi (1.271%), DWS (1.212%), Qube (1.021%) and JP Morgan Chase (1.009%).