The striking hostile takeover launched by BBVA on Sabadell (an operation of this nature had not been seen since 1987, the golden era of the yuppies financial, with the failed attempt by the then Banco de Bilbao to buy Banesto for the brave) will not be, as some hope, a military parade. When the entity of Catalan origin (although based in Alicante) just a few days ago rejected a merger with BBVA, Sabadell had already outlined its defense strategy due to the suspicion that Carlos Torres (president of BBVA) could try to burn all their ships in the attempt to take over their business. This strategy of resistance to attack is based on five lines of defense.

The mass of shareholder-clients

The vast majority of Sabadell's 205,000 shareholders are individual investors who control 48% of the shares. In turn, approximately 75% of these minorities are also clients of the entity itself, with an average tenure of new years, which, according to the experts consulted; “It provides a notable defensive belt to Sabadell, because they are the least interested in the bank disappearing swallowed up by BBVA.” This strength, it is true, has a weak point, the lack of a powerful hard core that allies itself with the Sabadell board, which gives BBVA a good opportunity to convince institutional investors (who have 52% of the shareholders)., something they also claim they are already doing. In fact, the president of BBVA, Carlos Torres, assures that some large investors have conveyed his favorable position to him.

The legal front

Precisely, this statement by Torres, implicitly admitting that he has contacted investors before formally presenting the takeover prospectus before the Securities Commission (CNMV), is one of the causes that detonated the so-called legal front in the defense of Sabadell. The entity of Catalan origin has reported BBVA to the CNMV for violating the takeover law. According to Sabadell, which has legal advice from the Uría law firm, both the documentation presented to analysts (which was not incorporated into the takeover announcement) and the information itself offered in the meeting with analysts and later at a press conference, violate the article. 32.1 of Royal Decree 1066/2007, of July 27, on the regime for public offers for the acquisition of securities, “and, in general, they introduce incomplete data that may affect the market.” One of the most controversial aspects, according to the experts consulted, is that it is illegal to contact shareholders before presenting the takeover announcement.

The price has not changed

Indeed, the great novelty of the hostile takeover bid is only the figure and the terminology chosen, which shows a weakness because, what is important, which is the price offered to whoever attends the takeover bid, has not changed. It is the same one that BBVA offered in the merger agreement for good. The economic conditions that Sabadell then considered significantly undervalued the entity, but which, for BBVA, were the most they could offer (“there is no room” to improve the offer, said Carlos Torres) are identical: 30% bonus and valuation of Sabadell at 12,284 million euros, according to the price prior to the announcement of the offer last week.

An expert with little affinity with the operation criticizes: “They pay you with pieces of paper and they don't raise the price, and the quote has already said that it doesn't like it.” BBVA sank 6.7% on the stock market this Thursday, after the announcement of the hostile takeover bid, while Sabadell rose 3.1%. BBVA has in fact lost 11.8% since it announced its intention to merge on April 30, which translates into more than 7,000 million loss of value on the stock market.. Sabadell, on the other hand, has gained almost 7% in that period and has also accumulated a revaluation of 70% so far this year, leading the rises of the Ibex.

This immutable offer has another derivative. For some analysts, it incorrectly assesses Sabadell's perfect future: “Where Sabadell has the most offices, in Catalonia, is where there are the most duplications with BBVA.”. With the necessary sales and adjustments, the truth is that half of the bank disappears with that offer.” The percentage is not yet clear, because we have to analyze what is left over or not, but what is known is that Sabadell shareholders would only have 16% of BBVA's capital after a hypothetical absorption.

The political power has come out in a rush to reject the operation

Forget political colors. In a way hardly seen and even less so in recent times, governments of the PSOE (starting with the state government, also the most belligerent by far), the PP (Valencia, which has its Sabadell headquarters in Alicante), extreme left parties, such as Sumar or Podemos, independentists, such as ERC or Junts and even some regional business organizations have come out in force to criticize, for different reasons, the takeover bid for Sabadell. The most striking thing has come from the Government itself, with the Minister of Economy, Carlos Body, at the helm, who has stressed that the Executive “has the last word” in the operation.. Official Economy sources have been more forceful in rejecting the operation “both in form and substance” because they consider that “it introduces harmful effects into the Spanish financial system.”

The Government's position is key. If the current Executive has demonstrated anything, it is that he does not hesitate to give his opinion and even to facilitate or torpedo key economic operations. Talgo is delaying as much as possible the approval of the purchase of the Hungarian consortium Magyar Wagon while waiting to find an industrial partner to accompany Criteria, which acts almost like your investment bank. At Naturgy, it will only facilitate the entry of Arab capital if they go hand in hand, again, with Criteria. In Telefónica the State already has 7% and intends to reach 10% in a movement that they describe as defense of the national interest after the entry of Arab investment.

Related news

It is not only about what the business environment describes as political “interference” in the field of business, but also that the Government's frontal rejection can make large investors who could be inclined to the takeover wave hesitate. Another key derivative is that although the takeover bid can go ahead as a legal operation, the subsequent merger does require the 'ok' of the Government.. If it does not have it, the paradox would arise that the synergies that give meaning to the operation could not be achieved (more than 800 million a year, BBVA has estimated), with which BBVA would have a majority stake in an entity that also compete with him.

Doubts about the concentration levels that would be generated

This is another uncertain point and therefore, in principle favorable to questioning the operation. It is true that Competition approved, in 2021, the absorption of Bankia by Caixabank, which also generated enormous duplications and the consequent adjustments, and that Torres has assured that “the potential effects would be moderate”, but at this point the Sabadell version is Just the opposite, precisely because they emphasize that where the most duplication exists between both entities is in Catalonia. Besides, In the aspect of duplicity, the union organizations and the Sumar wing in the Government have raised their voices, pointing out that they will not allow closures and layoffs, especially in the middle of the electoral stage..

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