MADRID – Banco Bilbao (NYSE: BBVA) won shareholder support for a capital increase to fund its 12 billion euro ($13 billion) hostile bid for smaller rival Sabadell on Friday, as Spain’s second-biggest bank, attempts to strengthen its position at home.
BBVA relies on Mexico for more than half of its profit and combining with Sabadell, after a failed merger attempt in 2020, would create a bank with more than 1 trillion euros in total assets and mark the latest consolidation in Spanish banking.
“The proposed transaction increases our scale and also strengthens our position in Spain, an attractive investment market,” BBVA Chairman Carlos Torres said in Bilbao, where shareholders approved a share issue of up to 1.126 billion shares to fund the deal at an extraordinary meeting.
BBVA said it had secured the backing of 96% of the more than 70% of its shareholders present or represented at Friday’s EGM. Among BBVA’s more than 726,000 shareholders, 62.8% are institutional investors, and the rest are retail.
The EGM is another step in the complex and lengthy deal process. Sabadell shareholders, half of whom are retail investors, will not get a chance to vote on it for months.
“We are confident that the (takeover bid) process will progress favorably,” Torres said.
The final amount of BBVA’s capital increase will depend on the number of Sabadell shareholders that take up the offer. BBVA shareholders are not required to make any disbursements.
BBVA had set itself a minimum approval threshold of 50.01% of Sabadell shareholders.
Torres told Reuters last week that the bank had “no need” to improve its bid for Sabadell, as he vowed to push ahead despite political opposition and regulatory uncertainty.
JOBS
BBVA’s bid was rejected by Sabadell’s board, prompting a hostile offer directly to its shareholders in May.
The bid is opposed by the Spanish government due to the potential impact on jobs and customers.
Against that background, many union members at the EGM expressed concerns over potential job losses.
“If the merger is completed, the process must include a labor pact that protects the working conditions and employment of both workforces,” said Paola Torrico from the CCOO union.
BBVA is offering one newly issued share for every 4.83 Sabadell shares, a premium of 30% over the target’s closing price on April 29.
The offer had valued Sabadell at 12.28 billion euros, but a 12% drop in BBVA shares since has reduced it to 10.8 billion euros, according to Reuters calculations.
Sabadell has told its retail shareholders it has “excellent prospects” alone and that they may not need to decide on BBVA’s takeover attempt until 2025.
($1 = 0.9240 euros)
(Source: ReutersReuters)
