BBVA has carried out a transparency exercise that will be essential for shareholders to convince themselves that the operation, the second attempt, of merger with BBVA, is positive, although dilution is a point that, surely, they take into account the holders of securities of the bank chaired by Carlos Torres. On the side of the entity chaired by Josep Oliu, in the in case the operation does not work out, could suffer “a sharp fall” in the stock market, according to market estimates. Obviously, there will be division of opinion. The large funds that command the shareholders of Banco Sabadell are the ones who have the say. The bonus, the cash payment and the distribution of seats can determine whether the merger goes or not. The board of directors of the Vallesana entity has the ball in its court


There are five key points so that the operation can go ahead, convincing the current Banco Sabadell: the bonus, the payment, at least in part, in cash, the positions in the new entity that was born. Unfortunately, convincing the large shareholders of Banco Sabadell, who are the ones that can tip the balance, until achieving a majority of control. It happens that a hostile takeover could have reputation problems, in addition to the fact that the Bank of Spain does not like them and would try to get the parties to reach an agreement. This suggests that the BdE prefers a break in negotiations rather than a forced agreement, especially when none of the banks are in danger. And the fact is that 2024 is not 2007 or 2020, in the case of Banco Sabadell, which, without being in trouble, was looking for a bit of outside air, which is why it attempted the merger with BBVA.

Part by part. One of the fundamental points is that the premium offered by BBVA may increase. The negotiation is presumed to be long, two or three months, according to market sources, and Banco Sabadell can get more profit in the exchange. Banco Sabadell is trading at 0.8 times book value, market sources highlight. BBVA is out today at 9.85 euros per share and Banco Sabadell at 1.88 euros.

There are three key points for the operation to go ahead: the premium, the cash payment and convincing the large shareholders of Banco Sabadell,

The price offered by BBVA is 1.02 times in books and, for example, Bankinter and Caixabank are quoted at 1.2 times in books, while BBVA does so at 1.3 times. Banco Sabadell is in a position to ask for more, according to the market. The perspective is that the entity chaired by Josep Oliu can get 2.6 euros per share in the exchange, according to Castelo. In the case of shareholders of BBVAApart from the prospect of an increase in the share, there is the EPS that they can obtain and that can be 3.5% once they pay the restructuring costs, but the dilution is there.

Sabadell BankSabadell Bank
Sabadell Bank.

«The average of the market consensus says that the theoretical price of Sabadell Bank It is 1.92 euros per share, but there are analysts who value it at 2.50 euros per share. At 1.74 euros trading price Sabadell Bank It has a price/book value ratio of 0.8x, market sources said before the stock of the bank chaired by Josep Oliu rose.

«At the price that BBVA pays per share, the price / book value would be 1.02 times (1.02x, as it is known in the market) book value and it must be taken into account that Bankinter and CaixaBank are quoted at a ratio of 1 .2x and BBVA at a ratio of 1.3x. If I were one of Sabadell's managers and taking into account that they were going to pay in shares, not in cash, at least I would ask them for the equivalent in price to go to a ratio of 1.2x, that is, 2.6 euros per share », indicate iBroker analyst, Antonio Castelo.


The entity led by Carlos Torres Vila estimates that the merger with Sabadell would generate savings of 850 million euros annually. In this way, the restructuring costs would be paid in two years. The bank adds that once these savings are produced, earnings per share (EPS) will increase by 3.5% (at the end of the first quarter it stood at 0.36 euros per share). Likewise, it estimates that in 2026, two years after the merger, the operation would generate a return on investment (ROIC) of 20% for BBVA shareholders. “The proposed merger generates value for all stakeholders: shareholders, employees, customers and society as a whole,” the entity assesses in its letter.

In this sense there are other visions. «The price offered implies valuing P/VCT 24e of 1x that of Sabadell, which seems attractive enough that the operation may have a greater chance of going ahead vs 2020. «We do not see a potential improvement in the offer price, taking into account take into account that the exchange equation involves valuing 100% of Sabadell at just over 12,000 million euros, and in terms of multiples it implies a P/VCT 2024e of 1x, according to analyst Nuria Álvarez, from Renta 4.

“If the operation goes ahead, BBVA would have to issue 20% more shares than the current ones in circulation solely for Sabadell shareholders to subscribe, and therefore it would represent a significant dilution for BBVA shareholders,” says Álvarez.

If the operation goes ahead, BBVA would have to issue 20%, they point out in Renta 4

«We see as positive the fact of making the payment through a capital increase, which reduces the negative impact in terms of capital consumption. However, considering that the operation would mean BBVA issuing close to 20% more shares, the price should continue to be penalized in the short term. Likewise, Sabadell's price should converge towards the offer price, 17% higher than Tuesday's close,” indicates the Renta 4 analyst.

«We do not see the possibility of an improvement in the offer by BBVA if Sabadell rejects the proposal. Likewise, if BBVA was willing to pay part of the operation in cash, it could be a move that paves the way to closing the merger,” says Nuria Álvarez.

“We do not see the possibility of there being an improvement in the offer by BBVA if Sabadell rejects the proposal,” NOTES in RENTA 4.

«On the motives of Banco Sabadell shareholders who can see the operation well, I have no comments. There it will depend on each shareholder, the moment in which they entered Sabadell and the price they paid. So there will be detractors and no. points out the Renta 4 analyst.

For his part, from XTB, Joaquín Robles points out as advantages for BBVA «get a bigger size and become, together with BNP Paribas and Santander, one of the three largest European entities with more than 100 million clients, rstrengthen its position in Spain, one of its main markets, which would serve to bring it closer to CaixaBank as the first entity by volume of assets. It will also expand its business in the United Kingdom with TSB and the synergies of this operation, which will allow it to be more solvent and profitable in the future.


Regarding the “threats” for BBVA, he estimates that “the operation will be carried out through a capital increase, which represents a dilutive effect for the shareholder. More shares in circulation reduce shareholder value. «Just as synergies are expected in the medium term, in the short term we must assume restructuring costs, which affects profitability in the short term. Regarding the premium, there are shareholders who may consider that it is too much valuation from Banco Sabadell.

There are Bbva shareholders who may consider that Banco Sabadell's valuation is too much.

Regarding Banco Sabadell, Robles considers the advantage ofima of 30% on last Monday's price, the integration in one of the main banks at European level«. As pmain threatsRobles sees “regulatory approval, problems with integration and that in the in case the operation does not work out, could suffer a sharp fall” on the stock market.


For now, the merger is having a cost for BBVA shareholders. The shares of the bank chaired by Carlos Torres ended the week at around 9,850 euros per share, while those of Sabadell closed at 1,885 euros.

With a weekly perspective, BBVA has lost almost 10.3% on the stock market, which represents a loss of around 6,600 million euros in capitalization, falling to 57,504 million euros. On the other hand, Sabadell has been revalued by around 1,000 million euros, up to 10,255 million.

These data are relevant to the share exchange that BBVA has proposed and which involves an exchange of one new bank share for 4.83 Sabadell shares, with a 30% premium over the price that Banco Sabadell set on April 29, of 1.7375 per title.

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