The possibility of an improvement in BBVA's offer for Banc Sabadell became a little further away yesterday after the Catalan bank registered with the CNMV the letter sent by the president of BBVA, Carlos Torres, to his counterpart at Sabadell, Josep Oliu, last Sunday. “BBVA does not have any room to improve its economic terms,” stated the president of BBVA, also warning that the market does not welcome paying more for Sabadell.
That market (the stock market) yesterday did punish Sabadell (the stock fell more than 4%) when it understood that the possibility of launching a hostile or friendly takeover of the entity is complicated. The securities are now trading at 1.8 euros, still above the 1.73 euros they were at before BBVA's intentions were published.
Some analyst reports published yesterday, such as that of Autonomus, were along those lines. “We doubt that BBVA will attempt a hostile offer, which will most likely conclude the second attempt to purchase Sabadell here,” after the one in November 2020, the report says.
Torres' letter was sent on Sunday, reports El Mundo. It was the day before the Sabadell board of directors meeting in which it was decided to reject the proposal. In it, BBVA maintained that it could not “pay more premium” than what was already offered. It was all or nothing.
In the text, the executive also recognized the erosion suffered by BBVA's share price since the announcement of its merger proposal. “Since last Tuesday, the market has also made it clear that there is no further possibility of an increase, since BBVA's market capitalization has decreased by more than 6,000 million in the period,” he pointed out.
Faced with the fall of the Sabadell, the BBVA share is recovering the losses suffered these days in the stock market, with which the positions return, at least partially, to those prior to the announcement of the proposal. Yesterday it rose 0.9%, to 10.29 euros, still below the 10.9 euros on April 29. It is normal that the drop in recent days, which is a consequence of the purchase announcement, is compensated by the disappearance of the merger option.
Oliu had already maintained previous initial contacts with his counterparts at the bank of Basque origin and of which they had informed the Bank of Spain before it was communicated to the CNMV, as reported by La Vanguardia. According to sources familiar with the process, BBVA made a first contact with Sabadell in mid-April about the possibility of resuming the rigged merger talks in 2020. The intention was to start a slower process for the operation to mature. However, when the British channel Sky News reported the information on April 30, the CNMV issued a request to BBVA, which had to recognize its plan and prevented opening a negotiation.
Sources indicate that BBVA also held a board of directors meeting in mid-April in which this issue was addressed. They also affirm that before the presentation of Sabadell's quarterly results, BBVA asked the Catalan bank to hold a meeting on this matter, without negotiations ever taking place.
Sabadell continues with its agenda and yesterday, Wednesday, a round of meetings with analysts and investors began in London to inform them of the results of the first quarter. It is assumed that in these meetings the attention of the investment community will continue to focus at least in part on what has happened these days.
Yesterday, both the Minister of Economy, Carlos Body, and the opposition leader, Alberto Núñez Feijóo, agreed to distance themselves from the BBVA and Sabadell plans. Their messages are about “respect” for decisions and attention to the competitive environment, which is one of the elements that has generated the most concern these days among businessmen.
The president of the National Markets and Competition Commission (CNMC), Cani Fernández, revealed yesterday that BBVA contacted the regulator last week, in the middle of the offer, to report on the effects of the operation. It was, as she said, a “courtesy contact” made by “the parties” without further implications, since their teams cannot begin to analyze an operation of this nature until there is a binding agreement.
The CNMC's criteria regarding a possible new concentration operation in the banking sector would be similar to that applied in both the CaixBank and Bankia files and that of Unicaja and Liberbank. The methodology consists of studying market by market and area by area in accordance with the “necessity and proportionality” tests. The objective is to know the intensity of the competition in each case, without intending to "hinder business work."
