BBVA Bank Shares Slide After Sabadell Bid Adjustments

BBVA Bank Shares Slide After Sabadell Bid Adjustments

BBVA bank’s share fell 0.58% as the bank revised its takeover bid for Banco Sabadell, altering acceptance criteria and affecting investor confidence.

In a rather intriguing turn of events, BBVA bank has experienced a notable decline in its stock market performance following a strategic recalibration of its takeover bid for Banco Sabadell. The bank’s shares dipped by 0.58% at the close of Friday’s trading session, settling at €9.96 per share. This downturn coincided with BBVA’s decision to amend the minimum acceptance criteria for its public offer, effectively excluding treasury stock from the Catalan entity’s capital calculations.

Previously, the takeover bid necessitated a threshold of 50.01% of Sabadell’s share capital for acceptance. However, the revised stipulation now mandates that the offer must be accepted by “more than half of the effective voting rights,” thereby complicating Sabadell’s defensive maneuvers. In contrast, Sabadell’s shares concluded the trading day with a modest increase of 0.45%, valued at €2.01 per share.

Renta 4 has posited that this modification signifies a reduction in the requisite number of voting rights for the acceptance of the offer, emphasizing the importance of Sabadell’s shareholders’ voting rights. They further elucidate that this decision follows several months of negotiations with the CNMV, suggesting that market reactions may be muted, as it does not constitute a direct enhancement of the economic proposition.

Specifically, BBVA bank’s announcement detailed a recalibration of its public offer for the acquisition of shares (OPA) aimed at Banco Sabadell, streamlining the conditions for acceptance. Initially, the bid required acceptance from 50.01% of Sabadell’s share capital; now, this percentage is calculated based on the total capital with voting rights (49.3%), excluding treasury stock, which, according to prevailing legislation, has suspended its voting rights.

Analysts from Bankinter have characterized this adjustment as having a “neutral impact,” attributing it to Sabadell’s existing treasury stock, which is anticipated to increase should shareholder remuneration improve through share buybacks. They assert that this is merely a technical adjustment that does not alter the likelihood of the takeover bid’s success. The firm maintains that the probability of success diminishes unless BBVA enhances the exchange ratio or augments the cash component of the offer.

BBVA bank’s current proposal entails an exchange of one of its own shares and €0.29 in cash for every 5.0196 shares of Sabadell. With the regulatory requirements from the CNMC now established, the critical focus shifts to the acceptance of the offer by Sabadell’s shareholders.

This adjustment signifies a “reduction” in the minimum acceptance condition, ostensibly providing “more favorable treatment” for the recipients of the takeover bid—namely, the shareholders of Sabadell. The initial offer aimed to acquire at least 2,720 million shares of Sabadell, representing 50.01% of the bank’s capital. Given that Sabadell’s capital is currently represented by 5,440 million shares, of which 78.7 million are held in treasury stock, the offer will be deemed fulfilled if it garners acceptance for at least 2,680 million shares, assuming treasury stock levels remain constant. Notably, this threshold may fluctuate based on the number of treasury shares held by Sabadell at the conclusion of the acceptance period.

BBVA bank has also clarified that should there be any changes in Sabadell’s treasury stock by the end of the acceptance period, the acceptance will be considered fulfilled if it is accepted by more than 50% of the shares, thereby excluding the suspended voting rights of the treasury stock from the equation.

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