Three and a half years after the breaking off of the negotiations for absorb Sabadell for not wanting to raise his economical offer by the bank of Catalan origin, the BBVA It has been seen obliged to confirm this Tuesday his intention to “start negotiations to explore a possible merger between both entities.” Contrary to what is usual, the operation has transcended into a very initial phase due to a leak in the United Kingdom, where the main investment banks who advise these types of transactions. In fact, Sabadell has assured that I was not aware of the plans of the second Spanish bank. The entity, thus, has limited itself to pointing out that it has received “at 1:43 p.m. of today a indicative written proposal” from BBVA for a merger.


The news, thus, has been advanced by the correspondent of the British media 'Skynews' in the City of London (one of the largest financial centers in the world), who has indicated that BBVA has signed up investment banks JPMorgan and UBS as advisors. Shortly afterwards she was confirmed by the group chaired by Carlos Torres Vilawhich has also corroborated that “he has named advisors” for the operation. Sabadell, for its part, has been more concise: it has reported that it has received the written proposal from its competitor and has indicated that its advice of administration “will analyze adequately all aspects of the proposal”.

It cannot be any other way: company administrators have the obligation with its shareholders of studying any purchase offer they receive. The bank will now quickly convene a meeting of its board to make a decision. first posture and, where appropriate, also hire advisors. For now, the Actions of the Sabadell rise more than 4.5% at midday on the stock market, while those of the BBVA fall more than 3%. This proves that the market's first assessment is that the operation would be initially more favorable for the Sabadell shareholders (who would most likely receive a cousin regarding the entity's stock market price) that for those at BBVA (which would probably see the excess capital of the bank with which it remunerates its owners or even that the entity had to make a capital increase that would dilute its participation).

One trillion assets

If the operation finally went ahead, something that would be delayed Several monthsthe sum of the banks would give rise to an entity with slightly more than one trillion euros in assets totals (before the adjustments typical of this type of operations) and some 626,000 million of assets in Spain. The new bank could thus narrowly surpass CaixaBank (613,457 million of total assets) as the leading entity in the Spanish market, in addition to Santander (468,807 million in the country, compared to BBVA's 452,227 million). Also rwould shorten positions With respect to Santander as the first Spanish bank (the entity chaired by Ana Botín has 1.8 billion in total assets and BBVA, 801,690 million). On balance, the Sabadell would mean around the 22.7% of the new resulting entity.


As in any operation of this type, in any case, the issue key is the price (in addition to the distribution of power). If the model of the 2020 negotiations and what is usual in the banking sector is followed, it would be implemented through a share exchangeso it is essential Sabadell evaluation that BBVA proposes. Three years ago, when the bank of Catalan origin was going through a bad time, the group of Basque origin carried out an assessment considered unacceptable by Sabadell and the negotiations broke down, according to some sources due to a difference from around 200 million of euros.

Much more expensive

Since then, however, the Sabadell stock market value It has been shot thanks to the change in the model of governance (the president, Josep Oliú, ceased to be an executive and the CEO, Jaume Guardiola, was replaced by César González Bueno), the restructuring of business and the favorable wind of rate rise of interest. The bank's shares have risen from 0.302 euros prior to the announcement of negotiations in 2020 to 1.737 euros this Monday, with which the entity's stock market value has skyrocketed by 452%, from 1,700 to 9,400 million of euros, to which the premium that BBVA would pay would have to be added. In 2020, Sabadell hoped to obtain a 30% bonus. If it were repeated now, it would mean that it would aspire to be valued at 12,220 million, compared to 2,210 million then.

The operation, thus, would result much more expensive now for the bank of Basque origin than then, something that will have to explain to its shareholders and investors. However, its shares have also gained value since then, going from 2.593 to 10.9 euros, with which its stock market value has risen from about 21,160 million to 63,634 million of euros, 200% more. A key element is that to generate a negative goodwill With which to finance the adjustments inherent to any merger, BBVA would have to buy Sabadell for an amount lower than its theoretical book value (located around 2.2 euros per share).

Uncertainties

There are many uncertainties that weigh on the operation. As usual, both the CEO of BBVA, Onur Gençlike that of Sabadell, César González Buenothey have been there for several years denying have interest for participating in any type of merger. Without going any further, this Monday and last Thursday, respectively. In the case of the first, it is a common strategy to not make more expensive the operations. But it remains to be seen how firm the second's pronouncement was. On the one hand, in the market it raised suspicions that the bank decided a few months ago not present a new Strategic plan. But on the other hand, the entity has a situation and perspectives much more solid than in 2020, so at first it seems that the price It would have to be very attractive.


Another question to clear up is whether BBVA would be willing on this occasion to offer a position in his advice to Josep Oliú. In 2020, around Sabadell it was stated that the bank of Basque origin had refused to grant the Catalan banker a vice presidency non-executive of the resulting entity due to the fear that Torres Vila would be charged by the 'Villarejo case and had to resign, something that BBVA denied. The Catalan entity also complained about the lack of “transparency” about the situation of Warrantythe Turkish subsidiary of BBVA.

The absorption of Sabadell would allow the bank of Basque origin to grow in the profitable business of companies small and medium, as well as balance weight of its different geographies (Mexico accounted for 56.5% of the group's total profit until March, compared to 28.4% in Spain). It remains to be seen, however, what cost synergies could be done now, since since 2020 the two banks have significantly lightened their structures in Spain. The merger would initially have, prior to the more than foreseeable adjustment to achieve the savings that will financially justify the integration, a template of 140,776 workers, of which 41,176 they would be in Spain (three years ago, there were 46,365). Furthermore, it would have 3,069 offices in the country, in front of the 4,240 then

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