This Thursday, BBVA launched a hostile takeover bid for Sabadell. The operation mirrors the offer that the management of the entity chaired by Josep Oliu had on the table: an exchange of 4.83 shares of the Catalan bank for one of BBVA. As it is an unsolicited operation and already rejected by the board, it is called hostile. In detail, what is a hostile takeover and what will happen now?
A takeover bid is a purchase offer made by one company over another. As the CNMV, the stock market regulator, explains, “it is an operation by one or more individuals or companies offering all shareholders of a listed company the purchase of their shares (...) in exchange for a price. Although it is usually in cash, this price can also be in shares or mixed (money and shares).”
Broadly speaking, it can be friendly, which implies that it has been agreed between the offeror and the reference shareholders or managers of the entity that wants to buy; u hostile, an offer that has no prior agreement or has not been supported by management. “This qualification does not prejudge its possible interest for shareholders,” says the CNMV.
The hostile takeover is what happens in this case. Last week, BBVA already tried to agree on a merger with the management of Sabadell, which after meeting on Monday decided to reject the offer. “Banc Sabadell's strategy as an independent entity will generate greater value for its shareholders,” defended the entity's leadership. Better alone.
The current one is, therefore, an unsolicited offer, rejected from the top. BBVA now decides to launch a hostile takeover bid: its proposal is addressed to all Sabadell shareholders, who will be the ones who decide what to do.
Instead of offering a price for the shares, BBVA offers an exchange of securities. If all Sabadell shareholders accept the offer, they will have 16% of the capital of the future entity, as had already been proposed in the first offer from the bank chaired by Carlos Torres.
The proposed exchange, in accordance with the current evolution of the shares, is equivalent to valuing Sabadell's share price at 2.12 euros, or the entire capital at 12,376 million euros. This Wednesday Sabadell shares closed at 1.80 euros.
The takeover bid is conditional on a minimum acceptance level of 50.01%.
Hostile takeovers in the banking world are unusual in our country. For example, the last major operation, the merger by absorption of CaixaBank and Bankia, was carried out in an agreed manner.
But that doesn't mean they haven't existed. If you look at newspaper archives, in 1987 the Banco de Bilbao, then the fourth largest Spanish bank, set out to buy Banesto, the second largest. First, a friendly operation was attempted, but the meetings did not prosper and the Board of Directors of Banesto rejected the offer. A couple of weeks later, Banco de Bilbao presented a hostile takeover bid. “Bilbao's offer for Banesto unleashes an open war between the two banking groups,” La Vanguardia headlined at the time.
In this case, Bilbao also offered a share exchange that yielded a 40% premium. The hostile takeover did not go ahead as it was not admitted for processing.
Banco de Bilbao ended up looking for an alternative and acquired Banco de Vizcaya, fifth in importance in the national market.
