Not a shadow of a doubt. Banco Sabadell has decided to categorically reject BBVA’s merger offer for the second time in four years. The entity chaired by Josep Oliu considers that the proposal received by the bank of Basque origin last week “significantly undervalues” the entity’s project and its “growth prospects”, which is why it prefers to continue independently.
BBVA offers one share of the entity for every 4.83 shares of Sabadell. This means giving Sabadell’s current shareholders 16% of the bank’s capital, as well as setting the valuation of the Catalan entity at around 11,000 million euros, with a premium close to 8% according to the stock market closing this Monday. (although 30% when the letter addressed to the Sabadell council was written, that is, at the close of last Monday). In addition, the bank chaired by Carlos Torres offers Sabadell three positions on the board of directors, one of them a vice president, as well as several nods to maintaining the bank’s Catalan identity, such as preserving the bank’s brand in certain regions and one of the two operational headquarters in Sant Cugat del Vallès.
Banco Sabadell considers that BBVA’s bid has been “unsolicited, indicative and conditional.” The Catalan bank points out that this offer does not reflect its value, as well as pointing out that “the volatility” of BBVA on the stock market adds uncertainty to the valuation. As it is a complete exchange of shares, without a cent in cash, the value given to the Catalan bank varies due to the fluctuations in the BBVA Stock Market, which has lost 9% of its value since it sent the offer. Sabadell, for its part, rose 8%. This body considers that the offer, ultimately, “does not reflect the interest” of the bank and its shareholders.
“The Board fully trusts in Banco Sabadell’s growth strategy and its financial objectives, and is of the opinion that Banco Sabadell’s strategy as an independent entity will generate greater value for its shareholders,” reads the statement issued by the entity. . The Sabadell board has a majority of independent directors (10), two executive directors and two qualified as other external directors.
Last Tuesday, Banco Sabadell received this merger offer from BBVA in a letter that was quickly leaked to the media. The entity led by Carlos Torres thus resumes the project that they already negotiated in 2020. And that Sabadell also rejected then, considering that it did not reflect the value of the bank, at a time when it was worth four times less on the stock market than today. The Catalan entity then considered that it had more future independently and chose to appoint a new CEO, César González Bueno, and implement a new strategic plan. Four years later he points to a similar decision.
The board of directors of the Catalan bank met this Monday, in a marathon summit, which began in the morning and did not end until mid-afternoon. This body speaks out almost a week after receiving the offer, after an informative board meeting that resulted in the hiring of Goldman Sachs, Morgan Stanley and Uría Menéndez as advisors for the transaction. JP Morgan, UBS and Garrigues work on BBVA’s side.
The statement from the board of directors points only to economic issues to reject the transaction.
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