BBVA's takeover bid for Sabadell is a year in the making: the price will set the tone.

BarcelonaA global bank, BBVA, with significant subsidiaries in Mexico and Turkey, wants to take control of a deeply rooted bank, Banc Sabadell. These are two very different business models. And a year after the takeover bid (OPA), which was described by the Catalan bank's board of directors as hostile, uncertainties remain. The market is betting that the group chaired by Carlos Torres Vila will ultimately improve the offer, even though he has publicly rejected it. In fact, he can't do anything else, since it's unlikely he'll announce it in advance.

The offer was sudden, although BBVA sources assure that Sabadell's chairman, Josep Oliu, was aware of the bank's intentions in advance; that's why it was high, with no attempt to negotiate the price, according to financial sources. In any case, Moody's, one of the last to publish a report on the takeover bid, points out that BBVA can improve it up to five days before the end of the acceptance period after the National Securities Market Commission (CNMV) approves its prospectus. This could occur between late July and September.

The truth is that since January 21, Sabadell shareholders, more than 40% of whom are individuals and, in many cases, clients, would be better off selling their shares on the market than participating in the takeover bid. Last Friday, the last business day, Sabadell was trading around 4% higher than the offer price. Market sources emphasize that the correlation between the share price of one bank and the other was 60%, and after the takeover bid, it was "more stable," at around 90%. "That means it's assumed the transaction will go ahead," they assert.

Jaume Puig, CEO of Gaesco Gestión, believes that BBVA can only be successful if the price increases. "The current market environment is fully compatible with an improvement in the offer of between 7% and 8%" in three or four months, he states. This could be achieved by increasing the cash portion—from 0.70 cents to more than 1.2 or 1.3 euros—or by modifying the ratio of Sabadell shares to BBVA shares, or by other mixed solutions.

Many small shareholders, some from the association chaired by Jordi Casas, will not want to sell Sabadell shares at a price they believe does not reflect their true value. The bank has once again posted record results in the first quarter and is seeking to increase shareholder remuneration. Others, such as the insurance company Zurich, which has a commercial agreement with Sabadell and is the second largest shareholder after Blackrock, with 4% of the capital, are unlikely to sell because it would lose business, according to sources.

The strategies are another matter: BBVA wants to reduce its exposure to emerging markets such as Mexico and Turkey, with more Spanish business, and Sabadell's British subsidiary TSB. This pushes it to close the deal. And the Catalan bank aims to grow in Spain and could lead an integration with Unicaja, strong in Andalusia, or with Abanca, in Galicia—or both—according to some sources.

Although the National Commission on Markets and Competition (CNMC) ultimately unanimously endorsed it after imposing requirements, especially regarding loans to SMEs, doubts linger. The government, which has opposed it from the start—a banking integration has never been carried out in Spain without the approval of the central government—surprised the public this week when Prime Minister Pedro Sánchez announced a public consultation at the Annual Meeting of the Economic Circle in Barcelona. through the Internet, an unprecedented maneuver in this type of operation.

However, the measure was generally welcomed in the Catalan business community, as the merger could wipe out the only major bank headquartered in Catalonia, where it returned in the midst of a takeover bid. And there are other threats. The CNMC received allegations from 40 entities considered affected by the operation, out of a total of 70 that were applying. One is Foment del Treball, which appealed to the National Court against the CNMC's decision to prevent it from filing allegations and requested injunctions. It is still awaiting a court ruling.

In this context, the employers' association chaired by Josep Sánchez Llibre has joined a letter sent to the Prime Minister demanding a veto of the merger, along with Pimec, Pimec Autónomos, the 13 Catalan chambers of commerce, the Valles-based employers' association Cecot, FemCat, Fira de Barcelona, ​​​​the EACC, and the RACC. All members are urging their members to participate in the consultation and will also carry out a campaign aimed at the general population, especially entrepreneurs, SMEs, and the self-employed.

Individuals and organizations have until Friday, May 16, to submit their opinions, which will not be binding. The Ministry of Economy states that the process is the same as for consultations to draft regulations, with the corresponding data filtering and ID verification. Economy Minister Carlos Cuerpo assured that the system allows for up to 500,000 simultaneous entries. They will then have until the 27th to decide whether to submit the file to the Council of Ministers, which will then have 30 business days to decide on the planned merger and whether or not to set new conditions.

The market understands that once the CNMC has unanimous approval, it will be difficult to raise objections to the operation. Opinions must now relate to the general interest in very specific cases, as established by the competition law. These are national defense and security, protection of public safety or health, the free movement of goods and services, environmental protection, the promotion of technological research and development, and ensuring the proper maintenance of sectoral regulatory objectives. Despite the doubts, those opposed to the takeover bid hope to be able to substantiate the reasons for territorial and social cohesion.