Background on BBVA and Sabadell
BBVA, a prominent Spanish banking institution, announced on Friday that its hostile takeover offer for its smaller competitor, Sabadell, will commence on Monday. The Spanish market regulator approved BBVA’s acquisition proposal, which values Sabadell at approximately 14.90 billion euros (17.44 billion USD).
Key Details of the Offer
- Offer Value: BBVA aims to acquire Sabadell for 14.90 billion euros (17.44 billion USD).
- Expected Savings: The merger is projected to generate 900 million euros in cost savings, surpassing the initial estimate of 850 million euros.
- Timeline: The synergies from the merger will be realized by 2029, one year later than initially planned due to Spanish government restrictions.
- Post-Offer Timeline: Sabadell shareholders have until October 7 to tender their shares. The results will be announced a week later.
BBVA’s Perspective and Strategy
Carlos Torres Vila, BBVA’s president, expressed his enthusiasm for the merger on the bank’s website, stating that Sabadell should join BBVA as “the best possible partner,” emphasizing BBVA’s leadership in European growth and profitability.
Sabadell’s Board Response
The Sabadell board has ten working days to respond to the offer starting September 8. BBVA aims to secure a majority of voting rights, which would give them control over 49.3% of Sabadell’s shares.
US Regulatory Approval
BBVA also received approval from the US Securities and Exchange Commission (SEC) to lower the acceptance threshold to 30%. However, this would require launching a second cash tender offer within one month for the remaining shares.
Importance of Minority Shareholders
Minority shareholders in Sabadell, representing roughly half of the capital, are crucial for the success of BBVA’s offer. Despite initial skepticism, investors seem optimistic about a potential agreement between the two banks. However, BBVA has ruled out this possibility.
Offer Modification Period
BBVA can modify its offer until five days before the October 7 deadline. Sabadell’s share price has surpassed BBVA’s shares since the offer announcement on April 29, 2024.
Current Offer Details
BBVA’s current offer consists of one new ordinary share and 0.70 euros in cash for every 5.5483 Sabadell ordinary shares.
Key Questions and Answers
- What is the purpose of BBVA’s takeover offer for Sabadell? The merger aims to create a larger Spanish bank with over 1 trillion euros in total assets, making it the second-largest Spanish bank after Caixabank.
- When does BBVA’s takeover offer for Sabadell begin? The offer starts on Monday.
- What are the expected savings from the merger? BBVA anticipates 900 million euros in cost savings, surpassing the initial estimate of 850 million euros.
- What role do minority shareholders play in this merger? Minority shareholders, representing about half of Sabadell’s capital, are essential for the success of BBVA’s offer.
- Can BBVA modify its offer? Yes, BBVA can adjust its offer until five days before the October 7 deadline.
