Oliu urges loyalty from small shareholders: "Take the slip of paper and throw it in the trash."

Barcelona"It is not mandatory to accept the takeover bid. In fact, the best thing to do is to do nothing, take the paper [of the takeover bid] and throw it in the trash, and you will have fulfilled your duty as a loyal shareholder of Banco Sabadell." This is how the chairman of Banc Sabadell, Josep Oliu, asked his shareholders not to accept BBVA's takeover bid. He did so at a meeting with investors alongside the CEO, César González-Bueno, in which they explained the bank's board's reasons for rejecting the takeover bid. During the meeting, they also took the opportunity to deny the statements made by BBVA chairman Carlos Torres, who said last week that Sabadell's shares would fall if the takeover bid were to fail.: "If there is any fall, it will be short-lived, but little by little the bank will recover its value," said Oliu.

"In the bank's 140-year history, this is not the first time that an attempt has been made to acquire Sabadell, but it has never reached the point where the shareholders have to decide," explained the president of the Catalan entity, who insisted that the board considers that the change of shares "is not the best option for the Sabadells, because following the strategic plan "the value of Sabadell is 37% higher; This means the bank has room for growth."

"The offer is even worse than the initial one rejected by the board in May 2024, because after dividends distributed by both banks, Sabadell shareholders' stake in the combined entity is 16% lower than the initial offer (down from 16.2% to 13.6%)." Furthermore, accepting the takeover bid "means giving up the €2.5 billion dividend from the sale of TSB and paying taxes on an amount that could exceed the cash received," he recalled. This is because this exchange is not tax-neutral, so a capital gain must be paid corresponding to the entire value. On the other hand, in the case of a merger, there is tax neutrality, because it involves an exchange of shares and no cash is involved.

The dividend and the share

Sabadell's leadership has insisted that the two entities have "different" focuses. On the one hand, the Catalan bank "focuses on its growth in Spain, while BBVA is heavily dependent on emerging countries and has a more international focus," they point out. According to González-Bueno, it must be taken into account that "BBVA has some uncertainties" that Sabadell does not, and that "allow them to sleep more peacefully at night." "BBVA is not a European bank; it is an emerging country bank, which has consequences: two-thirds of BBVA's profit comes from emerging markets, which are highly exposed to currency depreciation," which, according to the CEO, "consumes capital and, therefore, reduces its ability to distribute dividends."

"If we look to the future, Sabadell's sustainable profitability is much higher than its cost of capital, with a forecast of 16% in 2027," the bank's chairman explained. "Furthermore, growth projections are above the market, at 5%. Both of these represent 15% shareholder wealth creation between 2024 and 2027," Oliu noted. He also sought to counter BBVA's promises, which repeatedly announced that a combined entity would result in a 25% improvement in earnings per shareholder (EPS). "This is based on a biased approach that ignores the benefit shareholders will receive on account of TSB; in reality, it is economically dilutive," Oliu asserted.

An improved offer?

If BBVA achieves acceptance by between 30% and 50% of Sabadell shareholders, it should launch a second takeover bid for the remaining capital, and in that case, it should be in cash. However, before the end of the voting period, BBVA still has room to improve its offer, despite its insistence that it will not. Initially, the deadline to make this move is September 24th, but Sabadell remains confident that it will eventually do so: "Despite their efforts to state that they will not improve the offer, in the CNMV prospectus they have reserved the right to do so beyond September 24th. This is the most important and immediate date: November," the CEO recalled.

However, González-Bueno has insisted on "doing nothing" and waiting until the end: "I will not go to the first takeover bid or the second [if there is one]. I'm standing my ground. And why? Last than the first."