The bank will open the exchange period next Monday, which will last a month, until October 7. BBVA delays the achievement of synergies until 2029 for the temporary veto of the Government to the merger.
The brochure published by BBVA incorporates changes in the offer, but maintains the essential, the price. The bank ensures that it is attractive and that the consideration offered (which today offers a negative premium of about 8%) is better than that of other ongoing operations in Europe. The Opply Law allows to review this price up to five business days before the closing of the OPA, something that will happen on October 7. Analysts believe that period will hurry.
“We do not see reasons to change the offer. We offer the same as at the beginning, only now it has more value. Since we present the offer (the exchange equation), the 12.2 billion euros (US $ 14,317.32 million) in which we valued Sabadell to 17,400 million (US $ 20,419.78 million), 43% more “, Carlos Torres has assured this morning at a conference with analysts. This calculation exceeds Sabadell’s capitalization because it incorporates the dividends paid by both banks since the OPA was announced.
An important novelty is that BBVA will review the remuneration policy to Banco Sabadell after the OPA settlement. “The Pay-Out ratio of the remuneration policy to the Sabadell Bank shareholder (60%) after the liquidation of the offer may be lower, equal to or greater than the one currently established,” says the document.
“The bank will consider promoting the realization of the changes that correspond to multiple factors such as the position in the capital of Banco Sabadell, His activity growth prospects, profitability and benefits forecasts, “he says.
BBVA makes a warning regarding the extraordinary dividend of 2.5 billion promised by Sabadell in summer. “Even having been approved by the extraordinary general meeting of Banco Sabadellthere is no security that Sabadell’s extraordinary dividend will be distributed effectively, since it is subject to the consummation of the TSB sales operation, “he says.
In the brochure, BBVA leaves the door open to reduce the minimum percentage of OPA acceptance, currently established in 50% of voting rights plus one, up to 30% of vote rights. To do so, that would significantly multiply the cost of the operation. The Opaas Law obliges, in this case, to launch a second offer per 100% of Sabadell, to pay in full in cash “at an equitable price.”
“The offer is conditioned to an acceptance of 50% because we want to control the bank. We do not anticipate modifying that minimal condition, “said Carlos Torres this morning to analysts.
Limited synergies before merger
In relation to the synergies, very affected by the Government veto to the merger for three years after the controlBBVA points out that they are maintained (in fact they increase from 850 to 900 million), but they delay the achievement period for one year, until 2029.
The first two years will only obtain 26% of the promised savings. BBVA will not eliminate Sabadell’s technological platform, its initial purpose, until the merger is executed.
The buying entity details in the document that the veto to the merger for at least three years set by the Executive “It does not prevent Sabadell’s control and its integration into the BBVA group or that both entities share best practices and operational efficiencies that maximize their value.”
BBVA performs two estimates. The first is about the synergies that will be achieved after Sabadell’s control, and the second, on the cost savings you will get with the merger.
The acquirer bank estimates synergies of operational costs for an approximate value of 175 million during the second and third year after the potential control of Sabadell. To this amount we would have to add the 60 million in financing synergies that the entity chaired by Torres estimates in the second year after the control, that is, in 2028.
Thus, the synergies planned for the previous period to the merger would be 235 million. In case this restriction is extended for two more years, the entity believes that it could continue to obtain 175 million annually.
The entity justifies this estimate for the progressive unification of suppliers in non -critical areas, such as auxiliary services and marketing; the implementation of parallel initiatives for automation of administrative or back-offese tasks; and the application of best practices in areas such as risk management, resilience and cybersecurity.
After the expiration of the government conditions, BBVA sees the remaining cost savings to the planned 900 million. This amount will be distributed at 510 million derived from administration and technology, 325 million personnel expenses and the remaining on financing costs.
BBVA will not make personnel adjustments for the next 12 months. The brochure eludes quantify what will be the magnitude of the template cut at the time of merger. BBVA maintains the commitment not to close more than 10% of the joint commercial network of the two banks.
