Background on the BBVA-Sabadell Takeover Attempt
BBVA, a Spanish multinational financial services company, initiated an offer to take over Banco Sabadell, another prominent Spanish bank, on September 8th after 16 months of announcing its intention. The success of this operation hinges on acquiring at least 50% of Sabadell’s voting capital. However, BBVA included the option to lower this threshold to 30% in its offering document.
The Conditional Second Offer
Should BBVA choose to lower the acceptance threshold, it would be obligated to launch a second offer, which must be in cash or have a cash alternative at an equitable price. The Spanish Securities Market Commission (CNMV) will determine this equitable price following the regulations outlined in the Real Decreto that governs public takeover bids.
Equitable Price Determination
According to the OPA regulations, if a company reaches control (typically at least 30% of voting capital), the equitable price must be no less than the highest price paid or agreed for the same shares over the past 12 months. The regulations also stipulate that if acquisition occurs through a swap or conversion, the price is calculated as the weighted average market price of those shares on the acquisition date.
CNMV’s Role in Price Adjustment
The CNMV has the authority to modify the calculated price under certain conditions, such as significant events affecting the target company’s value or indications of market manipulation. Moreover, if the equitable price is below the target company’s share price range on the critical acquisition date, BBVA cannot set its offer price lower than the lowest limit of that range.
Sabadell’s Stance on BBVA’s Offer
Banco Sabadell asserts that if BBVA is compelled to issue a second offer, the price should be significantly higher to entice remaining shareholders. CEO César González-Bueno stated, “The regulator’s intention is for that second offer to surpass 50% acceptance.” However, Sabadell acknowledges that the final decision rests with the CNMV.
BBVA’s Recent 10% Offer Price Increase
This week, BBVA raised its offer price for Sabadell shares by 10%. Despite earlier refusals to increase the offer, Sabadell’s management considers this adjustment minimal and barely equates to the current market value.
Sabadell believes that a 30% to 40% increase in the offer price would attract more investors. However, with the recent 10% hike, they doubt reaching the necessary 50% acceptance threshold.
Key Questions and Answers
- What is the current situation between BBVA and Sabadell? BBVA launched an offer for Sabadell in September, aiming to acquire at least 50% of its voting capital. They have the option to lower this threshold to 30%.
- How is the equitable price for a second offer determined? The Spanish Securities Market Commission (CNMV) sets the equitable price, considering factors like recent transactions and market conditions.
- Why is Sabadell confident about a higher offer price? Sabadell believes that if BBVA is forced into a second, cash-based offer, the price must be significantly higher to attract more shareholders and surpass the 50% acceptance threshold.
- What is BBVA’s recent action regarding the offer price? BBVA increased its offer price for Sabadell shares by 10% this week, despite previous reluctance to do so.
- How does Sabadell view the recent price adjustment? Sabadell considers the 10% increase minimal and insufficient to achieve the necessary shareholder acceptance.
