Suspense over BBVA’s Bid to Buy Banco Sabadell Continues

In a new twist to the Banco Bilbao Vizcaya Argentaria’s (BBVA) takeover bid for Banco Sabadell, the Spanish market regulator – National Securities Market Commission (CNMV) – has cleared the confusion surrounding the dates of the proposed acquisition. BBVA has offered $19.96 billion to acquire Sabadell, which was rejected by the latter.

The regulator said on Wednesday that the outcome of the offer is “expected” to be announced on October 17, and that the decisions arising from that result will be communicated to the market on that same day.

Therefore, if the acceptance rate remains between 30% and 50%, the scenario that several analysts currently consider the most likely, the Basque company will have to decide on that same date whether it will waive the current minimum acceptance requirement of 50% and continue its attempt to acquire Sabadell, launching a second offer with an all-cash option.

According to a report in Spanish newspaper elEconomista, the big question mark surrounding the potential second takeover bid remains the price, which must be fair. While BBVA maintains that it would be the same as the first offer, Sabadell is correcting this, believing it will likely be higher.

The discrepancies, which the top brass of both banks have expressed publicly in recent days in meetings with the media, relate to the method by which the price should be calculated, which trading date or days should be used for its estimation, and even whether the reference price should be BBVA’s or Sabadell’s.

Mere Speculation

The report also said that with regard to the confusion surrounding this matter, the CNMV clarified that if there is a second takeover bid, it will announce the criteria for determining the fair price, below which the price set by the bidder cannot be set.

“Consequently, any statement regarding the determination of the fair price that is reported to the market before the CNMV announces these criteria must be considered mere speculation,” the regulator said.

The regulator will have to approve the price of the new offer and reserves the right to make any changes in the event of speculative movements, in case takeover funds inflate Sabadell’s share price too much in an attempt to make a killing.

The regulator also warned that it will exercise its supervisory and sanctioning powers, if necessary, “in compliance with applicable regulations, independently, and with the primary objective of protecting investors and shareholders.”

Two days before the closing of the window, the adoption estimates provided by the two entities also differ. BBVA forecasts an acceptance rate of between 60% and 70%, while Sabadell expects it to be below 30%.

The report said that 20% of the shares belong to passive funds, that is, those that replicate the movements of the other funds. Once again, the projections differ: BBVA believes half will be used for the exchange, while Sabadell estimates around a third.

The minority shareholders remain, accounting for 40%. Banco Sabadell said that they will go for 3%-4% at most, while BBVA expects a larger turnout, especially since the majority will decide in the final days, as CEO Onur Genç noted.

Those who have already publicly taken sides are Mexican David Martínez, Sabadell’s largest individual shareholder with almost 4%, who has already opted for the swap, and the insurance company Zurich, with almost 5%, which, however, will not accept the offer, the report said.