July 19, 2024 | 1:13

Bilbao

The stock market penalizes the Sabadell bank

Mairenis Gomez

May 8, 2024 | 6:06 p.m.

Banco Sabadell discards BBVA's proposal after the entity communicated that there is no room to improve its economic terms.

Banco Sabadell has publicly revealed that BBVA, led by Carlos Torres, has communicated that has no room for improvement their merger offer, which was rejected by the Sabadell Board of Directors, chaired by Josep Oliu. In addition, the bank has denied that there were prior negotiations regarding the operation.

In a statement sent to the National Securities Market Commission (CNMV), Sabadell quoted verbatim a communication from the president of BBVA dated May 5, in which the bank indicated that its merger proposal would not improve: "BBVA has no “no room to improve its economic terms,” stated the president of the Board of Directors. The bank stressed that its offer, at a 30% premium to the share price as of April 29, was significant.

The proposed exchange equation and the stock market impact

Carlos Torres explained that the exchange ratio offered, of 4,83x (equivalent to 2,26 euros per share when the offer was made), offered a premium of 48% in relation to the average price in mid-April. However, BBVA has exhausted its margin, arguing that the market has made it clear that there is no possibility of improvement, especially after a stock market crash that cost BBVA more than 6.000 million euros.

In addition, BBVA warned that an increase in the premium could cause the bank's value to fall even further, with an impact greater than any improvement offered. According to Torres, investors and analysts agree on this diagnosis and that the current proposal already represents the financial limit that BBVA can offer.

Sabadell stock market reaction

Sabadell shares suffered a strong setback after the news, leading the falls of the Ibex 35 with a loss of 4,33%, standing at 1,799 euros per share. In contrast, BBVA remained in positive territory, increasing 0,93% to reach 10,29 euros per share.

Despite speculation by some analysts about an improvement in the cash offer, BBVA's position is clear. In the opinion of Carlos Torres, the current proposal already represents a significant premium, and any additional improvement could cause a financial depreciation that would make the operation unviable.

More news