Sabadell’s board of directors has firmly rejected a significant acquisition offer from BBVA, a move that is supported by one of Sabadell’s largest shareholders. The shareholder, Mexican billionaire David Martinez, who holds a 3.9% stake in the bank, criticized BBVA’s $18 billion all-share-and-cash proposal, labeling it as “the right strategy at the wrong price.” This declaration came in a Sabadell filing released on Friday, shortly after BBVA announced its much-anticipated tender offer.
BBVA’s proposition, which is aimed at creating a robust Spanish banking entity, has not resonated positively with all investors. The market’s response has been telling, as Sabadell’s stock is currently trading above the implied value of the proposed deal. This performance suggests investors perceive BBVA’s bid as an initial overture rather than a final offer, leading to skepticism about the valuation offered.
Under the proposed terms, shareholders would receive one new BBVA share and €0.70 in cash for every 5.5483 shares of Sabadell. This places Sabadell’s total valuation at approximately €15.3 billion (or $17.9 billion), which is notably lower than its current market capitalization of €16.9 billion. The disparity in valuation has raised eyebrows and further fueled the board’s resistance to the offer.
BBVA’s chairman, Carlos Torres, reiterated their stance last Friday, maintaining that there is no justification for increasing the offer price. On the other hand, Sabadell’s board has expressed unanimous opposition to the bid, emphasizing that it does not accurately reflect the intrinsic value of the bank. They also cautioned that the synergy projections presented by BBVA come with significant execution risks, which could hinder expected benefits.
Sabadell’s CEO, Cesar Gonzalez-Bueno, has been candid in his assessment, indicating that the current offer cannot be considered final. This statement suggests that BBVA may need to revise its bid if it hopes to gain acceptance from Sabadell’s management and shareholders. With a deadline looming—shareholders must decide by October 7—the dynamics of the situation appear to favor Sabadell, particularly given the recent rally in its stock price and the backing from a key shareholder. The interplay between these factors may place BBVA at a disadvantage as the bidding process unfolds.
