The CNMV authorizes BBVA's improved offer for Sabadell

MadridThe National Securities Market Commission (CNMV) has given the green light to BBVA's improved hostile takeover bid for Banc Sabadell, as announced Thursday morning, shortly before the stock market opened. With this authorization, the takeover bid acceptance period is back in motion. As announced by the CNMV itself, Banc Sabadell shareholders now have until October 10 (inclusive), instead of the 7th, to decide whether or not to accept BBVA's new offer, that is, whether to accept the takeover bid. For the moment, both banks have started the day with slight declines in stock market share prices.

BBVA announced on Monday a modification to the offer launched for Sabadell sixteen months ago, which represents a 10% improvement. Although part of the market expected the move to happen, the modification has effectively repealed what the bank, chaired by Carlos Torres, had maintained until now: that it would not touch the initial offer. "The offer is the offer," BBVA CEO Onur Genç repeatedly stated.

Specifically, BBVA was offering one new ordinary share of its own and 70 cents for every 5.5483 ordinary shares of Sabadell. With this Monday's modification, the proposal is being converted entirely into 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 improves tax benefits for shareholders, who will no longer have to pay a tax to the Treasury. It therefore represents a complete about-turn in the fight to convince Sabadell shareholders to participate in the takeover bid.

"Just a plate of lentils isn't worth the effort to launch a takeover bid," insisted the chairman of Banc Sabadell, Josep Oliu, in an interview with ARA published this Thursday. The bank's board of directors now has five days to issue a new opinion and recommendation to shareholders. When BBVA announced the improvement, Sabadell's executives didn't hesitate to react. The CEO of the Valles-based bank, César González-Bueno, quickly called it "bad." "It's worse than the first one," he stated in an interview with Onda Cero. The Valles-based bank says it is confident that this operation will not go through. In fact, they have stated that for now No client with shares has participated in the takeover bid., and which has not generated "any interest" among institutional shareholders. The main analyst firms have not seen the improvement as a stimulus either..

The possibility of a second takeover bid

The main objective behind BBVA's move is precisely to convince Sabadell shareholders to accept the takeover bid. Minority shareholders, for example, have clearly opposed the offer, accounting for almost half of the Catalan bank's capital. "A 10% increase is not seen as a move aimed at minority shareholders; rather, I believe it is intended for institutional shareholders," an industry source told ARA.

The ideal scenario for BBVA would be to reach the minimum acceptance percentage for the takeover bid (50.1% of the shares, or 49.3% if Sabadell's treasury stock is not taken into account). However, the bank has opened the door to continuing with the integration process of both banks even if that threshold is not reached. To gain control, it would only require the acquisition of at least 30% of Sabadell's share capital. However, this opens up another maze: that of a second takeover bid for Banc Sabadell.

If the takeover bid falls between 30% and 50%, BBVA is legally required to launch another takeover bid for 100% of Sabadell's capital, as it has done now, and submit a new offer. However, this time the offer would have to be in cash. Furthermore, the price of this bid could not be just any price, but rather a "fair price," and the CNMV would be responsible for ensuring that it was calculated. This would not only further lengthen the process, but would also require a formula to be able to afford a new outlay, such as a capital increase. But at this point, BBVA would need the approval of its shareholders.