The CNMV extends its support to the Spanish government to review the takeover bid law following the BBVA-Sabadell case.

MadridThe business and political storm that ensued from the hostile takeover bid by Gas Natural (now Naturgy) for Endesa led to an update of the takeover bid law in 2007. Almost twenty years later, and as a result of a new storm—BBVA's hostile takeover bid for Banc Sabadell—this regulatory framework is back in the spotlight. For days, various voices have been speaking out about the need to revise the law, and this Tuesday, one of the main stakeholders did so: the National Securities Market Commission (CNMV), which, as the stock market regulator, has acted as a referee during the process. "We are willing to support the Ministry of Economy if it decides to move forward in this direction [an update of the takeover bid law]," said the president of the agency, Carlos San Basilio, this Tuesday in a media address after his participation in a Deloitte conference.

The CNMV, therefore, extends its hand to the Spanish government regarding a revision of the current takeover bid law. In fact, San Basilio has acknowledged that "some areas have been identified in which, after so many years, it would make sense to [update the regulations]." The president of the CNMV has said that during all this time the law has been "useful," but that BBVA's hostile takeover bid for Sabadell, now it's bankrupt, has brought to the table some blind spots in the text. "Like any [regulatory] text, it may be subject to some revision. We have detected some specific drafting errors, and there are other issues that pose difficulties of interpretation that we would like to clarify," explained San Basilio, who expressed his "willingness" to support the department headed by Carlos Cuerpo if "on its own initiative" it decides to open this path. "We would give it our opinion," he added.

From the duty of passivity to a fair price

In 2007, the Royal Decree was revised to strengthen and clarify the so-called "duty of passivity." of the company on which the takeover bid was launched, which was then Endesa, chaired by Manuel Pizarro, who would later become the PP's number two in Madrid. Pizarro led a tough battle against the Gas Natural takeover bid – the press of those years reported that, with the Constitution in hand, the executive even promised that he would never be an employee of La Caixa (Gas Natural's main shareholder) and maneuvered in search of a white knight – which earned him a warning about the duty of passivity.

In the case of BBVA and Sabadell, the focus hasn't been so much on this duty – although at some point in the series the idea of a white knight was also floated – but at the end of the process, the idea of a second takeover bid and its fair price are what raised the most eyebrows. "Having to decide on the fair price of a second takeover bid has never happened before, and perhaps never will, but it would be good if it were more clarifying," noted the president of the CNMV. "The takeover bid isn't finalized, and you [CNMV] now have to offer a fair price [...]; this raises quite a few issues. We need to find a balance between the letter of the law and its application, and that, perhaps, is what should be clarified," the president of the supervisory body reflected.

However, it should be noted that this is not the only regulation that came into play during the takeover bid. The process, in which the National Commission on Markets and Competition (CNMC) intervened, was limited by competition law.