Banco Sabadell plummets almost 3.4% after rejecting BBVA's offer, which rises 1.7%

MADRID, 7 May.

Banco Sabadell plummets almost 3.4% after rejecting BBVA's offer, which rises 1.7%


Banco Sabadell's shares plummeted almost 3.4% on the stock market this Tuesday after rejecting the offer that BBVA, which rose 1.7%, had made to merge both entities, considering that it would generate more value alone.

Thus, Banco Sabadell fell 3.36% at the opening of the stock market, which led it to lead the declines of the Ibex 35, until exchanging its securities at a unit price of 1.826 euros, although minutes later, around 9:30 a.m., It moderated its fall to 1.56%, with its shares at 1.86 euros.

BBVA, on the other hand, opened the day leading the rises of the Ibex 35 with a rise of 1.68%, at a unit price of 10.005 euros per share, but then reduced its momentum to 1.46%, with its shares at 9.984 euros .

"The board fully trusts Banco Sabadell's growth strategy and its financial objectives and is of the opinion that its strategy as an independent entity will generate greater value for its shareholders," the entity highlighted this Monday, with the market already closed. , whose board of directors met to evaluate BBVA's proposal, which it described as "unsolicited, indicative and conditional."

Sabadell's board of directors also considered that BBVA's offer "significantly undervalues" the entity's project and its growth prospects as an independent entity.

In its communication this Monday, the Sabadell board also states that the "significant" drop and volatility in BBVA's share price in recent days generates "additional uncertainty" about the value of the proposal.

After analyzing the proposal "in detail", the council, which was also attended by representatives of Goldman Sachs and Morgan Stanley as financial advisors and Uría Menéndez Abogados as legal advisor, concluded that BBVA's offer "does not satisfy" the interest of Sabadell and its shareholders and, therefore, rejected BBVA's proposal.

The board believes that this decision is also "aligned" with the interest of Sabadell's clients and employees, and reiterated its commitment to distribute to shareholders, on a recurring basis, any excess capital above the 13% capital ratio. CET1 capital, in line with its strategy of creating value for shareholders, supported by the bank's business plan and "solid capital generation."

Sabadell estimates that the excess capital that it will generate in 2024 and 2025, together with the recurring dividends of this period, in accordance with "satisfactory" compliance with the current business plan, is 2,400 million euros, part of which may be subject to supervisor approval.

This is not the first time that both banks have had this operation on the table. Already in 2020, BBVA and Sabadell studied a merger, although they finally ended up rejecting it because they did not reach an agreement on the share exchange ratio.

Last Wednesday, BBVA announced its formal proposal for Sabadell in which it proposed an exchange of one newly issued BBVA share for every 4.83 Sabadell shares, with a 30% premium over the value at which Sabadell was listed on Monday the 29th. of April.

This offer meant valuing Sabadell at around 11,000 million euros, following the price at which BBVA closed today of 9.84 euros per share. In turn, it implies raising the value of the share in Sabadell to 2.2 euros - currently trading at 1.89 euros per share -, taking into account the 30% premium.

Following this exchange, BBVA was willing to issue shares of 1,126 million euros, which represent 20% of its market capitalization.

The offer made by BBVA proposed the incorporation of three members of Sabadell as non-executive directors on the BBVA board of directors. In addition, one of them would be proposed as vice president.

In addition, the bank estimated cost savings of 850 million euros and restructuring expenses of around 1,450 million euros, which represented an impact of 30 basis points on the CET1 ratio.