The National Markets and Competition Commission (CNMC) complicates public takeover bid (OPA) of BBVA on Sabadell by lengthening the analysis on the impact of a possible merger and open the door for the Government and other interested parties to give their opinions.
In a statement published this Tuesday, the CNMC confirms that it has decided that It is not enough to study the operation in the first phase, as it usually does in most cases and as happened with the merger of CaixaBank and Bankia, but on this occasion it is necessary to move on to a second phase of study that will last until 2025.
The Competition decision, a priori, complicates BBVA’s takeover bid for Sabadell announced on May 9 and complies with the wishes of the Catalan entity, which has always insisted on the convenience of the CNMC’s analysis going further and including a second phase.
The CEO of the entity, César González-Bueno, highlighted in an interview with EFE that there has been “an unprecedented level of agreement” in which unions, businessmen, autonomous communities and “the entire political arc” have considered that This operation raises competition problems.
For BBVA, however, it is a bucket of cold water because its CEO, Onur Genç, said repeatedly that I didn’t see “any problem” with competition and he hoped that the CNMC would give the green light to the operation in a first phase with the “precedent” of CaixaBank and Bankia, which created a larger group.
The CNMC explains that The economic sector affected by the operation is the financial sectorespecially banking services and payment services. In addition, the two entities are present in the insurance production and distribution market, in the pension funds and plans market, and in the asset management market.
“In view of the circumstances of the operation and its potential impact on the maintenance of effective competition, the Competition Chamber has resolved, in application of article 57.2.c) of Law 15/2007, of July 3, on Defense of the Competition, deepen the analysis of the file in the second phase of the procedure”.
In-depth analysis
The opening of the second phase does not prejudge the definitive conclusions that the CNMC can achieve in relation to the concentration operation.
In the first phase of the procedure, a detailed investigation has been carried out on the competition situation in the affected markets. This will result in greater efficiency in the analysis during the second phase, whose objective is deepen the study of the operation, explains the CNMC.
But upon entering a second phase of studying the operation, the CNMC open the door to listening to other partiessuch as consumers or business associations, to determine whether they oppose the hypothetical merger of BBVA and Sabadell or impose conditions that guarantee competition in the market.
Banco Sabadell and “other third parties with legitimate interest” may present allegations, but also BBVA itself, who will be able to make allegations and provide more information, clarifies Competition.
Likewise, the CNMC will request a mandatory report to the autonomous communities in which the concentration has a significant impact.
The final resolution approved by the CNMC may authorize, accept commitments, impose conditions or prohibit the operation concentration of BBVA and Sabadell.
Government participation
With the entry into force of the Competition Defense Law of 2007 Government intervention was considerably limited in the control of concentration operations.
The authorization of operations corresponds exclusively to the CNMC and only if it is prohibited or if it is subordinated to commitments or conditions of a certain operation during the second phase, the Ministry of Economy could submit it to the Council of Ministers.
It is there where the Executive, which from the beginning was against a possible merger, could impose its own conditionsbut never for competition criteria, but of another nature, for example, reasons of general interest.
In parallel to all this, BBVA’s offer to Sabadell shareholders is still pending approval of the National Securities Markets Commission (CNMV), which is key to approving the takeover prospectus and allowing the bank to move forward with its plans.
After a second failed merger attempt, BBVA launched an offer to Sabadell shareholders at the beginning of May, to whom offers the payment of 0.29 euros in cash and deliver one new share for every 5.019 of the Sabadelltaking into account the dividends paid by both entities in October.
And in the event that the takeover bid was successful, because more than 50% of Sabadell shareholders decided to sell their securities to BBVA, which would allow it to take control of the Catalan entity, The merger into the BBVA group would remain pending.
BBVA options
At the end of October, BBVA admitted the possibility of turning back in its plans to take over Banco Sabadell if it reaches the conclusion that the conditions that the CNMC ends up setting are “unaffordable”, as explained by the CEO at the results press conference.
If Competition decided to extend its analysis, Genç advanced, BBVA would respect that decision but would continue with its planseven if they took longer.
at the bank They are convinced that the Sabadell purchase proposal is good “for everyone” —for the economy, the shareholders of both entities, the clients and the employees— and Genç ruled out that both he and the president, Carlos Torres, will have to consider resigning if the operation ends up blowing up in the end.
Sabadell affirms that the decision confirms the complexity of the takeover bid
Banco Sabadell considered this Tuesday that the decision taken by Competition confirms the “complexity of the hostile takeover bid” launched by the Basque group.
Sources from Sabadell have conveyed this Tuesday to EFE their “respect for the supervisor’s work”, but have insisted on the idea that this takeover bid requires a “deeper” study of the consequences that this operation would have on the competition of the financial system. Spanish.
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