BBVA rises and Sabadell falls on the stock market after the takeover bid is approved.

BarcelonaShares in Banc Sabadell and BBVA opened this Friday with gains of around 2% after the National Commission of Markets and Competition (CNMC, the state competition regulator) conditionally authorized the Basque bank's takeover bid (OPA) for the Catalan entity on Wednesday. However, this stock market enthusiasm didn't last long for the Catalan bank.

BBVA managed to maintain its momentum throughout the day and closed with a 1.33% gain, while Banc Sabadell shares gradually declined throughout the day and ended, precisely, with a 1.33% drop. This was the response of the markets on the first trading day since the CNMC's announcement, which was made public on Wednesday with European stock markets already closed—yesterday the stock markets did not open due to the May Day holiday.

But shouldn't the opposite be true?

BBVA announced the hostile takeover bid on May 9, 2024, and that Thursday its shares fell 6.71%, while those of Banc Sabadell rose 3.17%. This is a common market response to this type of announcement, since a hostile takeover bid is considered a risky move by the company announcing it and an opportunity for investors in the company being purchased. But why has the opposite happened now?

For the director of the Master's in Finance and Banking at UPF-BSM, Xavier Brun, there is no relevant reason to explain this difference, which occurs on a day when most shares are rising in value, including those in the banking sector, with the exception of Banc Sabadell. But he points to the final offer price: "The green light has already been given and now the takeover bid is in the hands of the government, which may oppose the merger but not the purchase. This means that BBVA will issue the takeover bid and will remain firm on the exchange equation, meaning that it will not increase the VA offer. BBVA may have become discouraged and decide to sell." However, this expert does not rule out the possibility that the Biscayan bank may consider increasing it to finally convince Banc Sabadell shareholders.

Green light but with strings attached

According to the competition authority's decision, BBVA's acquisition of the Catalan bank presents risks in the retail banking market, both in services to individuals and small businesses and the self-employed. The CNMC also detected risks in the payment methods market, but at the same time considers that the commitments presented by the Biscayan bank were sufficient to avoid excessive concentration and, therefore, to authorize the takeover bid to go ahead.

The approval of the takeover bid was celebrated by Carlos Torres, president of BBVA, and criticized by Sabadell, as well as by various political parties that have openly opposed the operation. The Spanish government, which has also been opposed to the takeover bid since it was announced approximately a year ago, can still halt the merger of both entities (but not the purchase). Furthermore, the final say will also lie with Sabadell shareholders, who will have to decide whether to accept the conditions set by BBVA for the bank's acquisition.

While the Second Vice President of the Spanish government, Yolanda Díaz, was the first yesterday to ask Pedro Sánchez to halt the takeover bid, the First Vice President, María Jesús Montero, assured this Thursday that "it is still premature" to know what decision the executive will take. Today it was the turn of the Minister of Science, Diana Morant, who said that they will defend the general interest, and also that of the PP, from where they will remain "very attentive" to the Spanish government's approach, said its Secretary General, Cuca Gamarra.

Rejection by Juntos and employers' associations

This Friday, the party most vocal in its rejection of the takeover bid was Junts. Its secretary general, Jordi Turull, called on the Spanish government to make a "political decision" and not authorize the operation. "There is a legal basis, there is a legal basis for the Spanish government to make this decision," said Turull, the CNMV advisor proposed by Junts who voted in favor of the takeover bid on Wednesday. "If I had voted against it, I would have been left with one vote against, but that's what they managed to include in the legal protection report for women," he explained.

Along similar lines, the Vallesan employers' association Cecot warned in a statement this Friday that the takeover bid threatens to "erode the plurality of the financial system" and, therefore, the ability of many companies to negotiate terms, in line with the postulates of Pimec and Foment del Treball. The president of the Círculo de Economía (Economy Circle), Jaume Guardiola, who was CEO of Banco Sabadell for thirteen years, expressed his concern about the CNMC's ruling, considering that the commitments "do not fully reflect the risk" of the operation for competition. In an interview on TV3, he stated that he sees the central government's willingness to reject the takeover bid as high.