MADRID – The head of Banco Sabadell said it was highly unlikely that larger rival BBVA (NYSE: BBVA) would succeed with a multi-billion euro hostile bid for his bank.
“I think the chances of the operation being successful are very slim,” Sabadell CEO Cesar Gonzalez-Bueno told a banking event in Madrid on Monday.
However, BBVA’s Country Manager for Spain, Peio Belausteguigoitia, speaking on the same panel as Gonzalez-Bueno, said he was confident the acquisition would go ahead.
In April, BBVA launched a 12 billion euro ($13.4 billion) bid for all Sabadell shares, which turned hostile in May. It was met with opposition from the Spanish government but was given the green light by the European Central Bank on September 5.
Under Spanish law, the government cannot stop the takeover bid but has the final word on allowing a merger between the two entities. Spain’s stock market supervisor and antitrust watchdog CNMC must also authorize the acquisition.
The government believes the merger of the two banks could potentially harm the Spanish financial system. It could also affect jobs and customers.
However, Sabadell shares are 11% higher than they were on the day before the takeover bid was announced and remain 4% above the price following the hostile approach, signaling many investors believe BBVA will prevail.
BBVA (NYSE: BBVA) is offering one newly-issued share for 4.83 Sabadell shares, which represented a premium of 30% over the target’s April 29 close.
As BBVA shares have fallen to 9.276 euros from 10.90 euros since the offer was made, the premium is now only around 2%, valuing Sabadell at about 10.27 billion euros, Reuters calculations show.
BBVA has already received the green light for the deal from authorities in several countries where Sabadell has a presence, including Britain, the United States, France, Portugal, and Morocco.
Combining the two lenders would create a bank with more than 1 trillion euros in total assets.
BBVA, which has set itself a minimum approval threshold of 50.01% of Sabadell shares, said in May that the process could take six to eight months before formally going to shareholders.
($1 = 0.8990 euros)
(Source: ReutersReuters)
