BBVA‘s Takeover bid for Sabadell Faces Regulatory Review and Shareholder Uncertainty
BBVA is awaiting approval from teh Spanish National Securities Market Commission (CNMV) for its takeover offer (OPA) for Sabadell, a process elaborate by recent developments including a significant dividend payout planned by Sabadell and market pressure for a revised offer price.
BBVA has proactively addressed potential complications arising from Sabadell’s recent shareholder approvals. These approvals included the sale of its British subsidiary, TSB, and the authorization of a substantial €2.5 billion unusual dividend. To account for this dividend,BBVA has indicated it may reduce the minimum acceptance threshold for the OPA. The US Stock Exchange regulator has granted an exception allowing BBVA to publish the final prospectus in Spain before it’s formally filed with the SEC.The CNMV is currently reviewing the OPA brochure, which details the potential reduction in the minimum acceptance level. BBVA submitted the latest version in August, incorporating both entities’ first-half financial results and aiming to avoid coinciding the acceptance period with a month-end close. Sources suggest CNMV approval could come next week,though the timeline is contingent on the regulator’s review process,potentially requiring an unscheduled Council meeting.Onc approved, a 30-70 day acceptance period will begin, with market sources anticipating BBVA will opt for the legal minimum of 30 days. This suggests a resolution to the OPA is unlikely before mid-October. BBVA retains the option to improve its offer up to three days before the acceptance period closes and up to five days before any competing bids emerge. Sabadell’s Board of Directors will issue a report to the regulator within ten days of the acceptance period’s start, formally outlining their expected rejection of the offer.
A key point of contention is the offer price. Despite assurances from BBVA leadership that the bid will not be improved, market pressure persists. Currently, BBVA’s offer equates to €2.97 per share based on Thursday’s closing prices, while Sabadell shares are trading at €3.25, resulting in a negative premium of 9%.
This negative premium complicates the OPA’s success, as investors may prefer to sell their shares on the open market for a higher price than the offered exchange. The negative premium had previously reached 15%, but was reduced following the surprise proclamation of BBVA’s strategic plan (excluding the Sabadell acquisition) and concerns that BBVA might withdraw the offer after Sabadell’s board approved the TSB sale.However, the negative premium has recently increased again, highlighting ongoing investor skepticism.
