The board of directors of BBVA has decided to formulate a hostile takeover bid (OPA) for 100% of the shares of Banco Sabadell after this entity's rejection of a friendly proposal, in which it offered a consideration of one new share for every 4.83 of the Catalan bank, as reported by the entity to the National Securities Market Commission (CNMV) and includes Europe Press. It has also agreed the call for its general meeting of shareholders to decide on the issuance of new shares in the amount necessary to fully cover the exchange.

The equivalent price of the cash consideration is 2.12 euros by action of the entity of Catalan origin. The offer is conditional on obtaining more than 50.01% of the bank's capital, the approval of the necessary capital increase by the BBVA shareholders meeting and the approval of the National Markets and Competition Commission ( CNMC), as well as the prudential supervisor of the United Kingdom, where Sabadell operates with the subsidiary TSB.

The offer is also subject to the duty of prior notification to the Bank of Spain and obtaining non-opposition from the European Central Bank (ECB). It will also need authorization from the competition authorities of the US, Mexico and Portugal and will voluntarily notify the competition authorities of the United Kingdom.

The president of BBVA, Carlos Torres, assured during a conference call with analysts and investors that the ECB's preliminary opinion is “favorable” to the merger it has proposed with Banco Sabadell. In any case, he recalled that they have not yet received approval from the ECB and that they have to follow the formal process, as in any other operation. “But it seems to be a favorable opinion,” has indicated.

Between six and eight months

BBVA also estimates that closing the operation would take between six and eight months, once the necessary authorizations have been obtained. As explained by the CEO of BBVA, Onur Genç, to analysts, obtaining the necessary authorizations and holding the shareholders' meeting would take about six months. From there, the bank would launch the takeover bid for Sabadell itself, which would last a maximum of 70 days.

BBVA offers Sabadell shareholders an exchange of one new title for every 4.83 of Sabadell, the same offer that it had proposed last week to the board of directors of the Catalan entity and that it rejected last Monday. In this way, the 30% premium over the closing price of both entities on April 29 is maintained; 42% on the weighted average prices of the last month; and 50% on the weighted average prices of the last three months. Furthermore, Banco Sabadell shareholders will have a 16% stake in the resulting entity. The equivalent price of the cash consideration is 2.12 euros per share of the entity of Catalan origin.

The detail that has not been included in this proposal, compared to the offer that BBVA made to the board, in a friendly manner, last week, is the incorporation of three non-executive directors from Sabadell to the BBVA boardone of them with the position of vice president.

BBVA plans to present the request for authorization of the takeover bid to the CNMV, together with an explanatory project and other complementary documents, in “the first half” of a maximum period of one month from the date on which the decision has been made public. to formulate the offer.

Sabadell reiterates its rejection of the takeover bid

After learning about this takeover bid, Sabadell has reiterated its rejection and has referred to its communication on Monday, when it ruled out the operation on the grounds that it “significantly undervalues” the project and its growth prospects as an independent entity. Thus, sources from the Catalan bank informed Europa Press that they refer to what was communicated on the 6th, when the board of directors flatly rejected BBVA's offer to merge both entities, considering that Banco Sabadell will generate more value In solitary.

“The board has full confidence in Banco Sabadell's growth strategy and its financial objectives and is of the opinion that its strategy as an independent entity will generate greater value for its shareholders,” highlighted the entity, whose highest governing body is met on Monday to evaluate BBVA's proposal, which classified as “unsolicited, indicative and conditional”.

At that time he stated that the “significant” drop and volatility in BBVA's share price in recent days generated an “additional uncertainty” on the value of the proposal.

After analyzing the proposal “in detail”, the council, which was also attended by representatives of Goldman Sachs and Morgan Stanley as financial advisors and Uría Menéndez Abogados as legal advisor, concluded that BBVA's offer “does not satisfy” Sabadell's interest and its shareholders and, therefore, has rejected BBVA's proposal.

The council then considered that the rejection, in addition, is “aligned” with the interest of Sabadell's clients and employeesand reiterated its commitment to distribute to shareholders, on a recurring basis, any excess capital above the 13% CET1 capital ratio, in line with its strategy of creating value for the shareholder, supported by the bank's business plan and for the solid generation of capital.

The Government rejects the hostile takeover bid “both in form and substance”

For his part, the Minister of Economy, Carlos Bodyhas assured that “The Government has the last word to authorize” this hostile takeover bid and has indicated that The Executive rejects the operation for the “potential harmful effects” it may have on financial stability, customers and the economy.

Body, in statements to TVE reported by Europa Press, has limited itself to remembering that it is the Executive that will have “the last word”, when expressly asked what the Government can do to avoid this operation. Likewise, he has indicated that “right now” the next steps are not for the Executive to take, which Instead, he will be the one who will have “the last word” when having to authorize the merger by absorption operation.

The minister has assured that the Government rejects this operation “both in form and substance”given that a hostile takeover can involve an element of “instability, uncertainty and volatility.”

BBVA warned Sabadell in a letter that there was “no room” to improve the merger offer

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Corps, which has admitted to having contacted “all the relevant agents” related to the operation to convey the Government's “opinion”, has also rejected the takeover bid due to the banking concentration that it will entailby increasing the market share that the three main Spanish banking entities will concentrate from 62% to 70%, which will harm competition and have “negative effects” for clients, for financial inclusion and for financial stability and transmission of monetary policy.

Thirdly, he has been opposed to the takeover bid for “harm territorial cohesion and the structuring of the territory” in terms of employment and activity. “I believe that there is a clear argument and a very determined vision on the part of the Government to have and maintain a strong, solvent financial sector, but one that thinks and, above all, continues to deepen our social agenda of financial inclusion and keeping its clients in mind,” he reiterated.

This is not the first time that both banks have had this operation on the table. Already in 2020, BBVA and Sabadell studied a merger, although they finally ended up rejecting it because they did not reach an agreement on the share exchange ratio.

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