A combined entity would become one of the largest lenders in Europe by assets, with about one trillion euros
[MADRID / LONDON] BBVA has eight billion euros (US$9.4 billion) in capital for a mandatory cash offer for Sabadell should it fail to convince enough of its smaller rival’s shareholders to accept its hostile offer, chief executive officer Onur Genc said.
In an interview with Reuters on Oct 3, Genc said his base case was that BBVA would get more than 50 per cent of shares in Sabadell to clinch the all-share 17 billion euro (S$25.6 billion) takeover offer. Sabadell’s shareholders have until Oct 10 to decide.
If BBVA secures more than 30 per cent but less than 50 per cent of Sabadell shares, it must make a mandatory offer in cash to remaining investors, or walk away from a deal it has been trying to complete since April 2024.
A combined entity would become one of the largest lenders in Europe by assets, with about one trillion euros.
Should it decide to make a mandatory cash offer, “we don’t need to raise capital in our view”, Genc said.
Whether BBVA makes such an offer would depend on several factors, including the percentage of shareholders it would need to buy Sabadell out, he said.
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“If it’s between 30 per cent and 50 per cent, it might, it might not happen. Depends on the take-up, depends on the price, depends on market conditions,” Genc said.
If BBVA needed to buy out 70 per cent of shares in cash, currently with a market value of 11.7 billion euros, the eight billion euros would not be enough and it would need alternative sources of finance such as raising capital, something its chairman has ruled out.
Brokers differ on most probable outcome
Citi assigned a 45 per cent probability that the take-up would be in the 30 to 50 per cent range, while broker Autonomous assigned an around 25 per cent probability to that scenario.
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BBVA’s CEO said the bank estimated it would end 2025 with a core tier-1 capital ratio of 13.75 per cent, which would imply excess capital of seven billion euros above its 12 per cent solvency target, without including the suspended one billion euro share buy-back.
Jefferies analysts believe a cash bid for the remaining capital would be more realistic if the take-up rate approaches 50 per cent.
A mandatory offer would be conducted at the same price as the current offer, Genc said, although the fair-value price would be set by the supervisor.
Shareholders of Sabadell are widely dispersed and around 40 per cent are retail investors.
BBVA’s chances of clinching the deal improved after it increased the bid and David Martinez, Sabadell’s largest individual shareholder, agreed to tender his 3.86 per cent stake although Sabadell’s board reiterated that BBVA’s improved bid undervalued the lender. REUTERS
