Background on BBVA and Sabadell
BBVA, one of Spain’s leading banking groups, and CaixaBank-owned Sabadell are key players in the Spanish financial sector. BBVA, with a significant presence across Europe and the Americas, has a market capitalization of over €60 billion. Sabadell, on the other hand, is a mid-sized bank with a market cap of around €4 billion. Both institutions play crucial roles in providing financial services to individuals, businesses, and public entities across Spain.
The Proposed Merger
BBVA announced an improved offer for Sabadell on Monday, valuing the smaller bank at approximately €17 billion (around $20 billion). The Spanish market supervisor approved this enhanced offer on Thursday.
Key Terms of the Offer
- Share Exchange Ratio: BBVA offers 4.8376 of its own shares for each Sabadell share.
- Offer Price: The improved offer translates to €3.39 per Sabadell share, representing a 10% increase from the previous offer of €3.084 per share.
- Total Value: The total offer is now worth €17 billion, up from the previous €15.5 billion.
Timeline and Next Steps
Shareholders now have until October 10 to submit their Sabadell shares, an extension from the previous deadline of October 7. The results are expected to be published seven days after the acceptance period ends.
Sabadell’s Stance
Sabadell has five days from the approval date to issue a statement on the enhanced offer. CEO César González Bueno has indicated that the board “probably” won’t recommend the new price, which Sabadell still considers insufficient.
Market Reaction
The initial offer provided a 1.6% premium over BBVA’s closing price on September 18. However, since the new offer was announced, Sabadell’s shares have underperformed BBVA, causing the premium to rise to 2.89% by market close on Wednesday.
Key Questions and Answers
- What is the purpose of this merger? The merger aims to create a more robust and competitive banking group, potentially leading to cost savings, increased market share, and broader service offerings.
- Why is the Spanish market supervisor involved? The supervisor ensures that mergers and acquisitions comply with regulations, protect investors’ interests, and maintain fair competition within the market.
- What happens if Sabadell’s shareholders do not accept the offer? If a significant portion of Sabadell’s shares remains unclaimed, BBVA may need to reconsider or adjust its offer to secure the necessary support for the merger.
- How will this merger impact customers? The merger could lead to changes in banking services, branch networks, and product offerings. Customers should monitor communications from both banks for details on any potential changes.
