The rumors that for weeks suggested that the CNMC was going to take the decision regarding BBVA’s takeover bid for Sabadell to the second phase were confirmed this Tuesday by the public entity. The organization has decided that the first phase of study is not enough, as on other occasions, and sees it necessary to move on to Phase II, in an analysis that will last until 2025.
“The operation requires a more in-depth analysis,” the organization states in the statement issued this Tuesday at the close of the markets. The Competition Chamber has adopted its decision “in view of the circumstances of the operation and its potential impact on the maintenance of effective competition.”
In any case, what consequences can this decision bring? From Bankinter they explain that “it is bad news, since it prolongs the uncertainty about the outcome until the first half of 2025 since it would have three months to decide and the approval of the CNMV is missing.” “In addition, it reduces the probability of success of the operation because it increases the possibility that Competition increases the demands on BBVA to authorize the takeover bid, something that could negatively impact the synergies and the initially expected profitability,” he adds.
However, there has been a reaction on the online trading floor with a lower probability of success and Nor have analysts made cuts of valuation or recommendation that discount this scenario that is now gaining strength and that is in line with the statements of the CEO of BBVA, Onur Genç, this Wednesday, in which he points out that although he trusts in the approval, in the event that lose the potential value of the operation, they would let it fall. “We clearly believe in the value creation potential of the operation for the shareholders of BBVA and Sabadell and for society in general,” Genç said at a financial conference meeting organized by Deloitte and ABC. “But if the potential is compromised, we have the option to leave. We will not hesitate for a second to withdraw if that is the case,” he added.
Thus, the analysts who cover these two companies and have updated their estimates between Tuesday and Wednesday, have not made relevant cuts beyond CaixaBank, which has reduced Sabadell’s target price by 2% to 2.15 euros. If, hypothetically, the takeover bid were to fail, BBVA would recover part of the value lost in these months due to the capital increase that it would have to carry out to buy Sabadell while the latter would stop trading with the premium that the bank put on the table. Basque.
It must be remembered that this premium, when the terms of the operation were first announced, exceeded 25% based on the prices of both shares on the stock market and their exchange ratio. Now, this extra for the Catalan shareholder barely exceeds 1.5%. “We continue to think that the probability of a takeover bid is reduced if BBVA does not improve the exchange equation and/or increases the cash payment,” they argue at Bankinter.
In Renta 4 they comment that “the main implication of the CNMC’s decision is the lengthening of the terms and, consequently, a greater period of volatility and uncertainty for both quotes.” “We do not believe that the conditions that the CNMC may establish for BBVA to approve the operation will force the entity to back down on the offer and we believe that the most feasible scenario is acceptable conditions for the bank, if Well, the uncertainty about the impact on the numbers increases, making the operation less attractive,” they conclude.
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