June 14th, 2024 | 6:15

Bilbao

Sabadell is already negotiating and is beginning to discuss the numbers presented by BBVA in public

Jesus Carames

May 17, 2024 | 11:15 a.m.

The battle for the merger between BBVA and Banco Sabadell has taken a significant turn with the recent hostile takeover proposal by BBVA. After Sabadell's initial refusal, BBVA has decided to take its offer directly to the shareholders of the Catalan entity, in a move that reflects the determination of the bank chaired by Carlos Torres to consolidate its position in the Spanish market.

The BBVA offer

BBVA has proposed a share exchange that consists of offering 1 new BBVA share for every 4,83 Banco Sabadell shares. This offer, based on the closing price of April 29, represents a 30% premium and values ​​Banco Sabadell at approximately 12.277 million euros. According to BBVA, the cost of restructuring the merger is estimated at 1.450 million euros, with synergies valued at 850 million euros. This cost would have a negative impact on capital of 30 basis points.

Carlos Torres, president of BBVA, has defended that the ratio of restructuring costs and synergies achieved is 1,8 times, which he considers a very attractive offer for Banco Sabadell shareholders.

Banco Sabadell's response

The board of directors of Banco Sabadell, led by César González-Bueno, has rejected BBVA's offer. According to González-Bueno, the board applied a corrective factor and concluded that the correct multiple would be three times, instead of the 1,8 estimated by BBVA. Furthermore, González-Bueno has pointed out that the impact estimated by BBVA does not include the breakup of joint-ventures, such as those that Sabadell has with Amundi in asset management and with Zurich in bancassurance, which would significantly increase the cost of the operation.

The board of Banco Sabadell has also expressed concern about the fall in the price of BBVA shares, with which it is intended to pay Sabadell shareholders, and the social impact on employees and customers.

The way to follow

BBVA has reiterated that all the figures presented have been calculated with the utmost rigor and that it is now the shareholders of Banco Sabadell who must comment on the offer. The bank has stressed that contacts began in mid-April, despite González-Bueno stating that there were no negotiations prior to receiving the offer on April 30.

BBVA's proposal, although initially rejected by the Sabadell board, will now be submitted to shareholders for consideration. The offer includes a share exchange that, according to BBVA, is extraordinarily attractive, with a valuation that exceeds the market price of Sabadell shares by 30%.

Impact on the market and employees

The possibility of a merger between BBVA and Banco Sabadell has significant implications for both the financial market and the employees of both entities. BBVA estimates that the merger will result in a 41% reduction in costs, which has raised concerns among Sabadell employees about possible layoffs and restructuring.

In summary, BBVA's hostile takeover proposal to Banco Sabadell shareholders marks a crucial chapter in the recent history of the Spanish banking sector. With both entities firmly defending their positions, the final decision now falls to Sabadell shareholders, who will have to evaluate the proposal in detail to determine the future of the Catalan entity.

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