Josep Oliu: "A plate of lentils isn't worth going to the opa"

BarcelonaJosep Oliu (Sabadell, 1949) has been living for over sixteen months in suspense over BBVA's hostile takeover bid for the bank he chairs. He received the ARA at Sabadell's headquarters in Sant Cugat just two days after BBVA announced a new offer—according to Oliu, "worse"—to Sabadell shareholders. The situation remains pending, first, on the approval of the new offer by the CNMV (Spanish Securities Market Commission), and then on the position of Sabadell's board of directors.

Why do you consider BBVA's new offer to be a bad one? Is it enough to convince shareholders?

— It's not enough, I think, to convince the majority of shareholders, because it's still a low offer. Nothing has substantially improved compared to the first offer, which was a merger offer. On the contrary, it's worse than the first. It doesn't move the needle compared to what was there. It's still far below the value we love, which is Sabadell. It's an offer that will provide lower returns to shareholders, lower remuneration; it has no premium or a 2% premium. I would tell Sabadell shareholders that for a mess, it's not worth selling a project that serves the Catalan community, companies throughout Spain, that has helped create companies, and that has a very differentiated way of doing banking... That's why it's bad.

And the price?

— It's a price well below our estimated value, the value of Sabadell based on its forecasts for the coming years. It will pay out fewer dividends than Sabadell did. Those who are going to the takeover bid, therefore, will forgo these dividends based on BBVA's, which are uncertain. Sabadell's forecast is correct, we know what we'll do, BBVA doesn't know if it will make a second takeover bid, and it doesn't know if it should carry out a capital increase; it's uncertain. Therefore, I believe nothing has changed.

— The only fabrication this takeover bid made, which it was intended to do, was to claim it was better from a tax perspective, which it isn't. It's only better if it wins, but not if it doesn't take away 50%. But since the probability of it exceeding 50% is very slim, in my opinion, it won't be.

After the CNMV approves BBVA's new offer, Sabadell's Board of Directors is scheduled to meet. What will it say?

— Well, I'll tell you what I think. It's logical that the Bank's Board thinks the same as me, because if they said no to the first exchange proposal, now that things are worse... Maybe there's a magic formula that determines Sabadell's exact value. It's still an uncertain offer, because it depends on the price of BBVA and what BBVA does and whether it needs to do a capital increase afterward. So, from the Bank's Board's point of view, there's obviously a debate about whether the deal is a good one or not. As you know, I believe that Banco Sabadell is a fundamental element for the financial system, obviously in Catalonia, but also for the whole of Spain. It would be a shame if the shareholders, in some way, if the price were good enough, missed out on the possibility of Banco Sabadell continuing to create value on its own.

What would be a good enough price?

— Ah, I don't know. A good enough price would be one that all shareholders agreed to. We're far from that price today.

When was the last time you spoke with Mr. Carlos Torres? Is your relationship with him good?

— Every time he does something. The other day he told me he was raising the offer by 10%. We've had a very good relationship with him from a personal perspective.

Why do you think BBVA is so insistent on the takeover bid?

— This is difficult to understand. He's never told me this, nor have I asked him, but I know the type of person he is: he's quite stubborn. His current insistence is because Sabadell must be very necessary for BBVA's project, and it's necessary to offset its excessively large presence in emerging countries compared to Spain, which would offset, so to speak, its risk profile. I think that's the reason for his insistence, but for Sabadell, BBVA isn't necessary.

If they don't reach 50.01%, they said they have the option to resign.

— Yes. We don't know the date. They will have known the results before us. So they have time to think about how they will react.

And what implications might there be from the fact that they renounce their duties and opt for a 30% to 49.99% rate?

— There are three scenarios. If they get less than 30%, that ends this story. If they get more than 50%, which in a way also ends the story, another one begins, but that's BBVA's story. And if we end up between 30 and 35%, and obviously if they stay below 50%, Carlos Torres has said they'll let it be, but the prospectus says they might not. Then a period of uncertainty arises. If they continue, they have one month to submit a second takeover bid, which is mandatory.

In terms of bank management, what could a situation like this mean?

— The bank's management is always based on who the shareholders are. If the shareholders want something else, we'll talk about it, but the bank's management for three years, regardless of the people, must be exactly the same.

When they say that shareholders who participate in the takeover bid won't receive the TSB dividend, will they indirectly receive it?

— Of course, because BBVA will receive it. It depends on what it decides. It's distributed among everyone. At least in BBVA, the Sabadell shareholders are deducted, and it means that by receiving SO MANY, SO MANY [he emphasizes with sarcasm] BBVA shares, these SO MANY already include the cents they would have had, which somehow are obligatorily kept there in the form of BBVA shares. But what BBVA receives is the dividend. Any bank shareholder who participates in this takeover bid is being lured by the siren song. But it's nothing more than a siren song, because this can't be sustained either from an economic perspective or from the perspective of the interests of Sabadell shareholders.

The other day, Sabadell's minority shareholders association insisted that they believe the CNMV isn't acting properly as a regulator, and they accused Carlota Torres (BBVA) of manipulating the stock. What do you think?

— I think they have the right to do so. But I don't have an opinion. We tell the CNMV directly what we have to say. But never in public. And obviously, it doesn't make sense now. Because they said they wouldn't raise the offer, and they have. So this creates a lot of uncertainty for those shareholders who want to participate in this takeover. And in the face of uncertainty, the best thing is to stay put, because those who stay put will always win. Whether nothing comes of it or something does.

The BBVA president said the takeover bid would give Catalonia greater economic power because it would gain a larger bank's decision-making center.

— Let's see if there's anyone Catalan who believes that. Sabadell has been a project with Catalan roots for 140 years. And it's a project that's part of the centrality of that country. It's a Spanish project, a bank project, and a local project. That is, it's rooted in Catalonia, but also in Galicia, Asturias, León, Murcia, Andalusia, and Madrid. This makes Catalonia the place where Sabadell Bank draws its essence, its identity. Sabadell is different from the others.

Is there a chance that someone will come along to counteract this, a white knight?

— No, no one has spoken out. There are shareholders who are interested in talking to us when all this is over and we're done with the takeover bid. In other words, the takeover bid is acting as a buffer for us today.

What does it mean?

— For example, there's a very clear one. We have an agreement, a European alliance strategy, and we've had it for some time. If the takeover bid is successful, it will disappear. Therefore, this [takeover bid], which is an operation aimed at making Europe more, is actually an operation aimed at making Europe less and Spain more, or more emerging countries more. But we have an agreement with Zurich, with Crédit Agricole for investment funds, we have an agreement with BNP, and one with Nexi, which is pending. Nexi is a global payment system operator. We were about to start it; it's a strategic collaboration, and we haven't been able to launch it because, of course, there's a bottleneck. And we're putting in extensions until the situation is resolved. In this sense, there are projects that we can't do while we're working on this [the takeover bid].

If there is a second takeover bid, at what price should it be?

— The second takeover bid must be priced above what is defined as a fair price. The price of the second takeover bid must be set by BBVA, and it can set it as high as possible, for example, if it bids 20%. Now, those in the first takeover bid will look a bit foolish, but they can do it if they want, they can do whatever they want. Now, it must be above the fair price, and this must be determined by the CNMV. I think the CNMV should determine what that fair price will be or how it will be calculated.

Who is paying more for this effort, BBVA or Sabadell, to defend themselves?

— Well, proportionally, it probably costs us more, since we're smaller. But we've been very careful with this, because in some ways, the team involved in the takeover bid and the one involved in the bank have been practically separated. However, it's a burden.

Under any circumstances, as president, would you sell your shares?

— In the context of that takeover bid, no. I would only sell my shares if I could recommend it to the majority of shareholders. But if I can't recommend it to the shareholders, then no.

Do you think the Spanish government has done everything in its power to protect Sabadell's interests?

— I think he's done everything he had to do, as has the CNMC. It seems to us that he's done everything he could, respecting the shareholders' wishes and establishing a transition period. He's done everything he could, yes. I think he could have banned it in that sense, but then imagine the political uproar that would have ensued. Everyone [including the opposition] has agreed with this approach because no one really likes this project.

In Catalonia, I don't know if they expect President Salvador Illa to take a clear position on the part of the Generalitat.

— No. Let's let him be the president. I'm already the president of the bank, and I'm trying to make this happen the way the president would like, which I know about. And the way most people in that country would like it to happen, which is to emerge as an autonomous entity, a project like the one it is.

What will be left in Catalonia if it loses this battle that has generated such consensus?

— We defend as much as we can that the bank will generate value and deliver returns because it already serves our customers in a unique way. This is the only thing that sustains us. If this is lost, others will have the responsibility to continue doing the same things Sabadell did. But I hope that doesn't happen. We're a long way from that happening. I believe Sabadell will continue.