BBVA’s change in the takeover bid, considered by the market as a mere “technical adjustment”, hides a tactical movement that could affect Banco Sabadell’s shareholder remuneration policy. The Catalan entity already indicated in July its willingness to improve remuneration with a higher ordinary dividend and, above all, with the reactivation of the share buyback program frozen in application of the duty of passivity required by the takeover bid. The ban falls, however, if it is approved again at the shareholders’ meeting by its owners, something that the leadership of the Vallesan entity had anticipated that they will promote in the next call of the Assembly, which could be in March.
Last year, Sabadell raised its dividend promise above 2.9 billion for the period 2024-2025 in light of the record results. The expectation is that it will have exceeded 1,600 million euros in profits in 2024, of which it would distribute at least 960 million in ordinary dividends due to the application of the pay out of the 60% that had been set. Additionally, it has the commitment to distribute the capital that exceeds 13% of its CET1. Your balance It houses almost 638 million in extra solvency above said threshold, with the data closed as of September, and that could easily be used for said buybacks.
With these numbers alone it would add up to around 1,598 million, which if distributed 50% in dividends and 50% in buybacks as it did last year, would allow it to acquire a package of securities close to 7.3% of its capital. And the market also expects that in the last quarter it has been able to improve capital generation, without counting in all these numbers the extraordinary check of 406 million that a British court demands that Cerberus deliver to it for the brick it sold to it in 2018.
Lung for dividend and buybacks
Its firepower is incontestable and The market’s expectation is that it will take advantage of it to convince investors of its high attractiveness as an independent entity. while we see how the situation in Mexico impacts BBVA’s accounts. But the last movement of the Basque group introduces new elements into the plot.
In summary, the group led by Carlos Torres will now have to achieve 50.01% of the shares with voting rights and not the 50.01% of the total capital on which the success of the operation had been subordinated because it has requested that Do not count Sabadell’s treasury stock in the calculation. That is to say, The more capital Sabadell accumulates in treasury stock, the BBVA has to convince fewer investors so that they accept your offer and your total bill for the purchase would also lower because the number of your own titles that you would have to exchange for those of the Vallesano would be less. According to analysts, this would leave room for BBVA to raise the price.
Now, it can also tip the balance in Vallesano towards a greater distribution of ordinary dividends and, in any case, share buyback programs are not instantaneous. From the moment they are approved until they are executed, it takes weeks and even months, so that their development would be in step with the evolution of events. In any case, BBVA’s latest move has surprised the market.
Some analysts yesterday disfigured the lack of foresight in their reports of a change that they considered obvious – Sabadell revealed that it would reactivate buybacks in the month of July. For other experts, it denotes that your offer may not be attracting the massive support expected and is forced to look at every possible adjustment to achieve the necessary adhesion percentage and avoid a resounding failure. When the takeover bid was launched, 48% of the capital was in the hands of minorities, mostly with commercial and even emotional ties to the Catalan entity.
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