Madrid (Reuters) – BBVA Spanish bank said on Monday that it has noted its offer for Sabadell 10%, at 3.39 euros per share, thus valuing its rival at 17 billion euros.

BBVA now offers one of its own actions for each 4,8376 Sabadell shares in what would be the second largest banking transaction in Spain in terms of assets.

“The counterpart will now be entirely in the form of actions, so that shareholders carrying out capital gains will not be imposed in Spain, if acceptance exceeds 50% of Banco Sabadell’s voting rights,” BBVA said in a statement.

The BBVA board of directors has also agreed to give up the possibility of providing other improvements to the counterpart and extending the acceptance period beyond October 7, the results of this battle of more than 16 months being expected for October 14.

BBVA had previously offered a BBVA action for each 5.5483 Sabadell shares and 0.70 euros in cash, the equivalent of around 3.084 euros per share or 15.49 billion euros taking into account the fence prices of Friday September 19 and the previous exchange ratio.

Sabadell’s general manager, Cesar Gonzalez-Bueno, said that the new offer was “clearly modest” and that BBVA’s chances of success had decreased.

According to him, this incentive measurement represents a premium of 1.6% compared to the closing course on Friday and institutional investors expected better conditions.

Since April 29, 2024, Sabadell shares have jumped by more than 80%, while those of BBVA have increased by around 50%.

“Since our value has (almost) doubled since the launch of the public purchase offer, the board of directors will probably say no, but it is their decision and we will have to wait to see,” Cesar Gonzalez-Bueno told the Spanish public television channel TVE.

Convince the shareholders

David Martinez, the main shareholder of the Sabadell board of directors with a participation of 3.86% via Fintech Europe, said that BBVA’s initial offer was the right strategy, but that it was too low.

BBVA said that Sabadell shareholders who had already sold their actions when the public purchasing offer was launched on September 8 would benefit from improved conditions. The bank added that the subscription period would be suspended until the Spanish securities commission (CNMV) approves the improved offer.

At 07:41 GMT, the title of Sabadell fell 3.38% to 3.23 euros. The BBVA title ceded 1.92% to 16.10 euros at the same time.

“Due to the increase in supply and change of composition, the economic aspects of the transaction have decreased,” said RBC analysts in a note.

Analysts believe, however, that “the offer is fair and is not completely unexpected” and that it is “sufficiently attractive” for most Sabadell shareholders.

BBVA provides for an increase in profit per share of approximately 3% from the first year following the merger and a return on investment (king) of 17%, against more than 5% and more than 20% respectively under the conditions of the previous offer.

BBVA also provides an impact on the capital of approximately -21 basic points at the transaction fence, or 40 base points after an exceptional dividend paid by Sabadell following the sale of its British subsidiary TSB.

If BBVA retired this 50% threshold condition and obtained between 30% and 50% acceptance of Sabadell shareholders, it would be forced to submit another offer with an alternative in cash, potentially at a higher price.

“Although the offer remains lower than our course objective for Sabadell, we recommend that Sabadell shareholders give in their actions, because we believe that this offer has had a positive effect on the course of Sabadell action,” wrote Keefe Bruyette & Woods in a note addressed to its customers.

However, analysts from Alantra recommended Sabadell shareholders not to accept this new offer, saying that the 10% increase was “not convincing”.

(Written by Jesus Aguado, with Javi West Larrañaga, Etienne Breban, edited by Augustin Turpin and Blandine Hénault)

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