BBVA's Spanish expansion plans halted after Sabadell rejects takeover offer (updated)

Alantra Partners

07/05/2024 13:41

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      Market sees room for better BBVA offer, no hostile bid 
    

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      Shares in BBVA rise, Sabadell's fall
    

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      BBVA has excess capital of over 3 billion euros
    

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      Analysts see rationale for BBVA growth in Spain 
    

  
 (Recasts to focus on BBVA's options, includes comments from
Citi in paragraph 8, 9, BBVA's excess capital in 10)
    By Jesús Aguado
       MADRID, May 7 (Reuters) - Spanish bank BBVA's  BBVA.MC 
bid to rebalance its business towards its home market has been
set back after Sabadell  SABE.MC  rejected its takeover offer,
with analysts on Tuesday divided about whether BBVA would return
with a better offer
or turn its attention elsewhere.
    Sabadell's board said late on Monday that BBVA's all-share
offer - unveiled last week and valuing the lender at about 12
billion euros - significantly undervalued its potential and
growth prospects. 
    BBVA said it regretted Sabadell board's decision, which
comes nearly four years after previous negotiations for a merger
between the banks collapsed.
    BBVA could now walk away, raise its offer, or launch a
hostile takeover bid. A spokesperson declined to comment on the
next steps and when the bank's board would meet. 
    Flush with cash as higher interest rates hand banks across
Europe huge profits, BBVA hoped a deal with Sabadell would
rebalance its business away from emerging markets while creating
one of the euro zone's biggest lenders by market value.
    But investors have appeared unconvinced agreement would be
reached, with Sabadell shares rising after the takeover
announcement but remaining far below the premium BBVA had
offered.  
    At 1200 GMT, shares in BBVA rose 2.3%, while those of number
four lender Sabadell were down a modest 1.4%.
    Analysts at Citi said Sabadell's statement suggested its
board could be looking for a cash component.
    "BBVA's capital position leaves room to improve the offer by
adding cash but, management has struggled so far to convince
investors of the transaction's merit," it said.
    BBVA has about 3.1 billion euros of excess capital.
    Spanish broker Alantra said it did not expect BBVA to go
hostile, or switch to a cash bid, because it proposed a friendly
merger to Sabadell.
    RBC Capital said BBVA would likely have some wiggle room on
price and "Sabadell has probably not fully closed the door to
future negotiations, although the two parties currently seem a
long way away from finding middle ground".
        
  
    OTHER DEALS?
    Some analysts reckon BBVA could pursue deals other smaller
lenders should it drop any bid of Sabadell.
    "BBVA has more options on the table for growth in Spain and
could look to Bankinter  BKT.MC  or Unicaja  UNI.MC  as future
targets if it withdraws from this move," Manuel Pinto, analyst
at XTB, said.
    BBVA last week proposed offering one newly issued BBVA share
for each 4.83 Sabadell share, a 30% premium to Sabadell's
closing price on April 29 and valuing it at about 12 billion
euros.
    Taking into account Monday's closing share price of 1.8895
euros for Sabadell and the 9.84 euros for BBVA, the premium was
just 7.8%, valuing Sabadell at around 11 billion euros.
    ($1 = 0.9291 euros)

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FACTBOX-Spain's BBVA offers 12 bln euros to win over Sabadell   
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 (Reporting by Jesús Aguado; Additional reporting by Andrés
González; Editing by David Latona, Mark Potter and David Evans)
 ((jesus.aguado@thomsonreuters.com; +34 91 835 68 32; Reuters
Messaging: Reuters Messaging:
jesus.aguado.reuters.com@reuters.net))