BBVA wants to buy Sabadell for less than what is worth

The CNMC He has given the green light to BBVA OPA on Banco Sabadell imposing commitments for three years, but the greatest obstacle is not regulatory but financial. The operation presents A mathematical paradox: BBVA offers much less than Sabadell’s actions are worth.

The approval of the competition agency, far from clearing the way, has put on the table the contradictions of an operation that has been taking over more than a year and still having serious obstacles both financial and politicians.

In figures. The Basque Bank proposes An exchange of one action for every 4.83 shares of Sabadellwhat each Catalan bank title values ​​in 2.39 euros, compared to 2.56 euros to which he quotes. This 7% negative differential is the main anomaly of this operation.

There are hardly reasons for Sabadell shareholders to accept this proposal.

Main loser? Sabadell small shareholders, which They represent almost 50% of the capitalThey have no incentives to accept an offer that would make them lose money regarding selling their shares directly in the market.

This Atomized structure of the shareholders It is precisely one of the great challenges ahead of BBVA, which would need to convince thousands of retail investors to accept an operation that, at least in strictly economic terms, harms them.

Between the lines. The 7% discount indicates that the market assigns a few probabilities of success to the operation. If investors believed that the OPA will prosper, the price of Sabadell would be converging towards BBVA’s offer, not moving away from it.

Although BBVA tries to convey an optimistic narrative about the chances of success of its offer, that 7% gap transmits otherwise.

Turning point. BBVA has repeated that its offer will not improve because doing it would harm its own shareholders. Its calculations indicate that it has up to 2.3 billion to improve the operation, but this would erode the profitability for its investors.

The bank is at a crossroads:

• Or maintain its current offer assuming that you have little chances of prospering …
• … or the improvement at the cost of harming their own shareholders, which contradicts their duty as a quoted company.

The backdrop. The government adds uncertainty to the process with The announcement of an unprecedented public consultation prior to its final decision. Pedro Sánchez has stressed that he will support the operation “as long as it benefits the common interest.”

This consultation, unprecedented in operations of this caliberunderlines political reluctance towards a bank concentration that would further reduce competition in the sector and could have consequences in access to credit for individuals and SMEs.

And now what. CNMV must now approve the OPA brochureprobably in early July, opening a 30 -day acceptance period that will partially coincide with August, month of low stock activity.

This circumstance could lengthen the process until September, far beyond the original calendar that managed the BBVA. The calendar thus plays against an operation that accumulates both delays and uncertainty.

• Financial logic suggests that the operation is dedicated to failure if BBVA does not improve its offer, but doing it would harm its own shareholders.
• It is a dead end alley for one of the greatest business operations in Spanish banking.

In Xataka | Revolution is doing in the bank the same as Netflix in entertainment or Amazon in retail: conquer from the margins

Outstanding image | Joel Filipe in Unspash