BBVA's takeover bid for Sabadell ends seventeen months later with an eye on a possible second round.

BarcelonaThis Friday, October 10th, is the last day for Banc Sabadell shareholders to decide whether to accept BBVA's takeover bid—that is, whether to accept the share exchange offered by the Basque-based bank—or whether to retain the Catalan bank's shares. The order can be placed until 11:59 p.m. this Friday (by phone), and BBVA's offices will be open until 9:00 p.m. However, if the shareholder does not wish to participate in the takeover bid, they need not take any action. On the stock market, both banks closed the week in the red. Sabadell shares closed down 2.61%, at €3.17 per share; while BBVA closed the day down 1.71%, with shares at €15.79. These figures leave the offer premium at positive, around 3%.

The current offer is the one announced by BBVA on September 22, which offers one new BBVA share for every 4.8376 Sabadell shares, 10% more than the initial offer. However, the final results will not be known until as of October 17, within a week. At that time, the National Securities Market Commission (CNMV) will announce the takeover bid percentages, which could open up different scenarios.

Possible scenarios

If BBVA obtains more than 50% acceptance of the share swap, this would mean the takeover bid has been successful, although for at least three years—extendable to five—both entities would have to remain independent companies, according to the conditions imposed by the Cabinet in June. Until then, the merger could not be carried out. BBVA Chairman Carlos Torres stated in an interview this Friday morning that they are convinced they will exceed 50% and that they will not pursue a second takeover bid.

In the reverse case, if BBVA were to achieve less than 30% support for the takeover bid, BBVA would renounce the takeover bid for Sabadell, thus ending a battle that has lasted a year and a half.

The most complicated scenario is if BBVA's offer achieves acceptance between 30% and 49.99%. In that case, the bank chaired by Carlos Torres would have to decide whether to continue with the operation. If so, BBVA would have to launch a second takeover bid for the percentage of shares it failed to secure, and the offer would have to be in cash and not an exchange of shares, as it is now.

The price that would be set for this hypothetical second takeover bid is still unknown, although both entities have given different versions of what it would be. In fact, the CNMV warned this week in a statement that it will be the regulatory body itself that will issue the so-called fair price and announce the criteria for its calculation. In any case, the agency is also expected to announce it on the 17th. If the second takeover bid scenario were to go ahead, however, a new chapter would open that, in principle, would not end until mid-November.

Crossed accusations

Over the past few weeks, as the acceptance period drew to a close, the tone between the two entities has been rising. Tensions boiled over when, at Sabadell's most recent board meeting, where the bank chaired by Josep Oliu announced its rejection of BBVA's improved offer, one of its directors and the bank's third largest shareholder, David Martínez Guzmán, distanced himself from the board's decision and announced that he would accept the offer with 8%.

Since then, there has been speculation about a possible agreement between the rebellious director and the Bilbao-based bank; an agreement that both parties denied exists, but Sabadell assures that "there have been talks between BBVA and the minister." The same is true. David Martínez denied it through an opinion article in the newspaper The Country, in which he assured that there is no agreement or conflict of interest between BBVA and him.

The battle, however, has reached the point where both entities They have reported each other to the CNMV alleging malpractice during the takeover bid. BBVA believes that obstacles have been placed in the way of its shareholder clients who have visited the Catalan bank's offices to inquire about the offer. Furthermore, the Catalan bank claimed to have detected, through a campaign of office visits and phone calls, that interested shareholders were being "erroneously" informed about various aspects of the operation.

However, while both banks continue to raise their voices, the outcome will be decided by the shareholders. It should be remembered that just over 40% of Sabadell's shareholders are minority shareholders—80% of whom have shares deposited with Sabadell, and the bank itself stated this Thursday that only 1% of them participated in the takeover bid—and the rest are institutional investors. Except for the 3.86% held by David M. Guzmán and some other funds with a smaller percentage that have already announced they will participate in the takeover bid, everything will remain unknown until –in principle– the 17th.