The merger project between two of Spain's main banks faces its first big test this week. The board of directors of Banc Sabadell meets today at noon to analyze the merger proposal submitted last Tuesday by BBVA, which includes an exchange equation that would give the Catalan entity a 16% weight in the shareholding of the resulting group. The meeting is expected to be long.
At the moment there is no official assessment from Banc Sabadell, beyond its willingness to “adequately analyze all aspects of the proposal.” There are sources that suggest, however, that the entity chaired by Josep Oliu sees the offer as low and unattractive. It has not been agreed upon or requested, and the proposed exchange without including cash may generate reluctance.
The bank has hired Goldman Sachs and Morgan Stanley to advise them in the process, in addition to Uría Menéndez to address the legal aspects. On the other hand, BBVA has also turned to large international banks and has the assistance of JPMorgan and UBS.
The options on the table are reduced to three. Banc Sabadell could open negotiations by accepting the proposed terms, demanding an improvement in conditions or rejecting the approach. In the latter case, the question arises as to whether BBVA would launch a takeover bid for Banc Sabadell, although the entity chaired by Carlos Torres assures that its approach is “friendly” and “attractive.”
A hostile takeover would be in cash, would be directed directly at the shareholders and would prevent Banc Sabadell from anticipating another banking movement – there is talk of its interest in Unicaja. It would have in its favor the atomized nature of Sabadell's capital and the non-existence of a hard core of opposition shareholders, but it could force BBVA to make an effort that is difficult to digest.
BBVA remains silent regarding the speculation, although the feeling is that the evolution of prices shows that the market is neither certain that there will be a merger nor is it betting on a takeover bid. Since the announcement, Banc Sabadell has risen 8.5%, to 1.88 euros per share, below the 2.25 euros at which the offer could be valued, while BBVA has lost 10%.
“If the market believed that Banc Sabadell was worth more, or that there could be another bidder, the share would be trading above the value of the exchange equation, but that is not the case,” say sources in the sector. At the same time, BBVA has been penalized on the stock market, which suggests that the market considers that “the offer was already very generous.” “BBVA shareholders are saying that the offer should not go any further,” they add.
This week's Banc Sabadell board meeting will be extraordinary and will also be held after the one held a few days ago, in which the first quarter results were approved. They are a record and reflect the good progression of the entity, which has been successful in the strategic plan launched in 2021 and to which analysts attribute the rise in the stock market. Of the Spanish banks, according to PwC calculations, it is the one that trades the most below its book value, which means it has expectations of revaluation.
A merger with BBVA would require not only an agreement between the two boards, but also the approval of an extraordinary meeting of shareholders of Banc Sabadell, which would have to approve the extinction of the company to be absorbed by the bank chaired by Carlos Torres.
The last annual meeting of Banc Sabadell was held on April 10 and there the president of the bank highlighted the good progress of the entity. Banc Sabadell is not only worth four times more than when it negotiated a merger with BBVA in 2020, but it also closed the best year in its history in 2023. It did so thanks “largely” to the strategic plan launched in 2021, which has made the bank a more “efficient” and “digital” entity, said Oliu.
Like the BBVA board, Banc Sabadell's board also has fifteen seats and has ten independent members. Apart from Oliu and the CEO, César González-Bueno, there is only one proprietary director – representing a shareholder –, the Mexican businessman David Martínez Guzmán. There are well-known and qualified profiles, such as the former Secretary of State for the Economy David Vegara or the CEO of the Catalan Socimi Colonial, as well as the former president of Mapfre José Manuel Martínez.
