BBVA’s $20 Billion Bid Splits Key Investors Days Before It Ends
(Bloomberg) — One of Banco Sabadell SA’s biggest investors said it will reject BBVA SA’s bid for its local rival, heightening uncertainty over the €17 billion deal just three days before it ends.
The offer “does not provide an attractive proposition,” a spokesperson for Zurich Insurance Group AG said Tuesday. The firm holds almost 5% in Sabadell. The announcement comes a week after another influential investor, David Martinez, said he will accept BBVA’s offer.
The opposite decisions by Sabadell’s second and third-biggest shareholders demonstrate the tightness of the tender offer, which will end on Friday. While BBVA’s leaders including Chairman Carlos Torres and CEO Onur Genc have repeatedly said they’re confident the bid will be accepted by investors representing more than 50% of the target’s shares, their counterparts at Sabadell, Chairman Josep Oliu and CEO Cesar Gonzalez-Bueno have said that is impossible.
Sabadell shareholders have until Oct. 10 to accept BBVA’s offer. If BBVA remains below the 50% threshold but gets more than 30%, it could choose to launch a second offer for the remaining shares, which would have to be in cash and at least as good as the previous one. There is a legal option for the price to be higher, but BBVA managers have said they would not launch a second takeover in that case.
For Sabadell it’s not clear “whether they’ll reach 30% or not, but 50% is definitely impossible” Gonzalez-Bueno said in an interview with Bloomberg News on Tuesday. He added that pace of retail shareholders tendering on BBVA bid “is slowing down.”
BBVA is offering one of its shares for every 4.8376 shares of Sabadell. That valued the target at about €16.8 billion at Monday’s market close, compared with a market value of €16.6 billion ($19.4 billion).
The Sabadell CEO also said that BBVA should clarify how it would finance a potential second takeover bid, adding that it could force biggest lender to launch a capital increase of as much of €4 billion.
Separately, on Tuesday ratings company Fitch said it was upgrading BBVA’s long-term issuer default rating .
“We expect BBVA to maintain its CET1 ratio within its strategic target even if BBVA’s stake in Sabadell rises to 30%-50% and the bank offers a second all-cash bid for Sabadell’s shares,” Fitch said.
Sabadell’s board has rejected BBVA’s improved takeover bid with all votes, except one in favor. Martinez, who owns 3.86% in Sabadell, had previously rejected the proposal but changed his mind after BBVA stepped up the price.
That move prompted an association of Sabadell retail investors to say that it was wary of potential “hidden agreements” between Martinez and BBVA, according to a newspaper report. BBVA Chairman Torres has since denied in a radio interview that any such agreements exist.
Sabadell has since called on Spain’s securities markets supervisor to impose more disclosure requirements on some investors who accept the offer.
Sabadell has also increased the guidance for future investor payouts in an effort to convince shareholders they’re better off if they reject BBVA’s proposal.
BBVA CEO Genc has said he expects the vast majority of institutional investors who hold shares in Banco Sabadell SA to accept his bank’s offer. “They’re gonna go, all of them,” he said in an interview with Bloomberg News on Friday, adding that institutional investors hold about 25% to 30% of Sabadell’s shares.
On Tuesday, Genc said at an event that Zurich’s refusal is “to protect their business,” and that otherwise he was “comfortable” that BBVA would exceed the 50% threshold.
(Updates with Sabadell CEO. An earlier version of the story was corrected to remove reference to firm headquarters in third paragraph)
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