The CNMV authorizes BBVA's takeover bid for Banc Sabadell

BarcelonaWith the return from the holidays, BBVA's takeover bid for Sabadell has been revived. The National Securities Market Commission (CNMV) authorized the transaction this Friday after reviewing the prospectus submitted by BBVA. The acceptance period for shareholders will be thirty calendar days, beginning next Monday, the 8th, which means the deadline will end on October 7th. "From now on, it's the shareholders' turn," stated Economy Minister Carlos Cuerpo, after participating in a conference at the Pimec headquarters in Barcelona.

According to the CNMV board agreement, as security for payment of the transaction, BBVA has submitted two deposits to make the cash portion of €701.4 million and an additional deposit for a total of €2.3 million. BBVA is delaying the expected savings because the Spanish government is forcing them to wait at least three years before completing a merger. In fact, it puts the value at 235 million, instead of the estimated 900 million with a merger, which it estimates could occur within a year.

And it maintains that its offer is "even more attractive today," although Sabadell shares are trading above what it is offering shareholders. This means it is maintaining the expected price. It also insists that it is the highest valuation for the Catalan bank "in more than a decade" and that the premium being offered "is much higher than that of recent banking takeover bids." The Basque-based bank emphasizes that Sabadell is trading at its highest levels in a decade, which it attributes to its operation. Once the acceptance period ends on October 7, the result of the offer will be published on the 14th of the same month, and the transaction settlement will take place from October 17 to 20.

30% threshold

The entity chaired by Carlos Torres had sent the CNMV the prospectus that this body had to approve for the acceptance period to begin. This is due toafter admitting the possibility of acquiring a minimum of 30% of the capital, Below the 50.01% (49.3% if treasury stock is not included) set when the transaction was presented almost a year and a half ago. This is acknowledged by the Basque bank after receiving authorization from the US stock market regulator, the SEC, which it requested to "align" the terms of the takeover bid with those of Spanish law. The condition means that if it reaches 30% or less than 50%, BBVA must launch a mandatory takeover bid for the remaining capital, as established by Spanish law, and it must be in cash. This, which would further complicate a transaction surrounded by controversy since its announcement on May 9, 2024, would have to be carried out no later than one month after the end of the takeover acceptance period.

There is one important factor currently tipping the balance in favor of those who oppose the takeover bid, including many small shareholders and the bank's second largest shareholder, the insurance company Zurich, and some funds that have expressed their opposition. The reason is that since last January, BBVA's offer price has been below Sabadell's market price. As a result, Sabadell shareholders would currently be better off selling their shares directly on the market than participating in the takeover bid. Therefore, most analysts predict that the Basque-based bank will improve its offer, something that the bank's management has denied on several occasions. BBVA, which is currently maintaining its price, has the option of improving it up to five days before the end of the takeover acceptance period.

Political and economic opposition

BBVA announced its offer almost a year and a half ago, and since then, the takeover bid has caused a stir. After announcing it just three days before the Catalan regional elections in May of last year, it was met with a barrage of criticism and outright opposition, not only from Sabadell's board of directors, but also from the Spanish and Catalan governments, as well as from much of the Catalan economic and business community.

Despite the setbacks and opposition, the Basque-based bank had already announced it was moving forward with its project, both after the Spanish government conditioned the operation on maintaining Sabadell's autonomy and, therefore, preventing a merger for three years, which could be as long as five; and after Sabadell's shareholders en masse endorsed the sale of the British subsidiary TSB to Banco Santander in early August. This is another of the Valles-based bank's offensives during this period. was to return the headquarters to its city of origin.

The fact is that the takeover bid has also entered the judicial arena, as BBVA opted to appeal to the Supreme Court the Spanish government's conditions, established after the National Commission of Markets and Competition (CNMC) endorsed the operation. This led to the opening of a file by BrusselsPedro Sánchez's executive even called a public consultation to gather opinions on a possible merger of the two banks and how it could affect public interests.

BBVA, which already attempted a similar operation in 2020 and failed because they could not agree on the price and distribution of power, has had to adjust its offer three times to the dividends that Sabadell has been distributing to its shareholders. The last time was last week, when the bank chaired by Josep Oliu distributed 370 million euros to shareholders, at a rate of 0.07 euros per share (0.0567 euros net, after deducting the tax withholding).

This sum is part of the 6.3 billion euros it 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 euros for the sale of TSB (50 cents per share) – massively ratified by shareholders at the beginning of August – and which will be distributed in early 2026.

The key to the success of the operation lies in the hands of investors. BlackRock, which this week surpassed 7% of the capital and is also BBVA's largest shareholder, He has established himself as the first individual holder of Sabadell titles.The bank has around 200,000 small shareholders, many of whom are also clients and who hold more than 50% of the capital. The reason why it is said that the vote could be close is that minority shareholders do not approve of the takeover bid. This opinion has been expressed by organizations such as the Banc Sabadell Minority Shareholders Association, chaired by Jordi Casas.

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