The Magallanes fund announces that it will not participate in BBVA's takeover bid for Sabadell.

BarcelonaThe president and investment director of the Banco Sabadell Magallanes Value Investors shareholder fund, Iván Martín, has stated that BBVA's offer for the Catalan bank "makes no sense" for the Valles-based bank's shareholders and that, therefore, the management company will not participate in the takeover bid. In an interview with the newspaper ExpansionMartín points out that what would make sense for his firm is for the transaction not to be carried out through a share exchange.

"Paying money isn't the same as paying in kind. And this is an in-kind offer. It's like being paid in houses, cars, or gold. It's not comparable," says the investor, who at the end of June 2024 held around two million Sabadell shares, representing 0.05%.

"What are they offering me? Shares in a bank I don't want, that I didn't have in my portfolio. Maybe I'm wrong, but I don't want them," he says. Thus, the Magallanes fund is confident that BBVA will improve the takeover bid price, but is cautious about how it will do so: "We'll have to see if it's still interesting or not. Common sense suggests the improvement should be at least 10%. From there, I think BBVA would start to stir feelings," says Martín.

However, the fund manager explained that there is a "third possibility," that the improvement in BBVA's offer is "so dramatic" that the shares "shoot up and the takeover bid is not attended [to, referring to Sabadell shareholders], but because they come first."

Against a non-merger

On the other hand, Martín believes that the "worst-case scenario" for Sabadell shareholders is that the takeover bid is closed in favor of BBVA, but without the merger taking place. "A non-merger is of no interest to a shareholder from a business perspective. The worst-case scenario is a controlling stake: the Banesto model. It makes no sense. And we wouldn't be in this Sabadell," the executive adds.

In the interview, Martín also criticizes BBVA's exposure to Mexico and Turkey: "They're offering shares in a bank with benefits and risks that come mainly from Mexico and Turkey. As if you told me they come from Colombia and Egypt. I think Europe is the best place to do now."