Sabadell demands BBVA to provide a definitive response on whether they will relinquish the OP, should they fail to acquire 50% of the voting rights
In a series of statements made at a New Economy Forum event in Madrid, the CEO of Banco Sabadell, César González-Bueno, has urged BBVA to clarify their intentions regarding the takeover bid for Sabadell. The crux of the issue revolves around the voting rights threshold, with BBVA's president, Carlos Torres, publicly stating that they would withdraw the takeover bid if they do not obtain 50% of the voting rights.
According to the prospectus for the takeover operation, the success of the Banco Sabadell takeover is linked to accepting more than half of its voting rights. However, it also includes the possibility of launching a second cash takeover bid if 30% is reached, as per Spanish legislation. BBVA has left open the possibility of a second cash takeover bid, according to González-Bueno.
González-Bueno believes that the "prisoner's dilemma" applies to Sabadell shareholders, as they have "no incentive" to accept BBVA's exchange offer if reaching 50% of the voting rights holders is impossible. He criticized Torres for publicly stating that BBVA would withdraw the bid if they do not obtain 50%, while leaving open the possibility of a second cash takeover bid in the prospectus.
Torres, on the other hand, has clarified that BBVA will only waive the 50.1% voting rights threshold if, at the end of the takeover offer, the non-withdrawn shares reach 30% of voting rights. Otherwise, they expect to maintain the minimum 50.1% threshold before withdrawing the offer. If only 30% of the voting rights are accepted, BBVA will have to launch a second takeover bid "without knowing what the final price will be."
González-Bueno warns Sabadell shareholders who consider accepting the first takeover bid that they may face a "dilution" of their shares or a "substantial reduction" in future dividends. He also points out that the Basque entity (BBVA) will have to allocate "billions of euros" to pay in cash to customers who attend the second takeover bid.
The final price for a second takeover bid, according to González-Bueno, will be set by the National Securities Market Commission (CNMV) and will be "higher" than the first offer. Spanish legislation allows for a second cash takeover bid if 30% of the voting rights are reached, as per the Banco Sabadell takeover operation prospectus.
The stalemate between the two entities highlights the complexities and nuances of large-scale corporate takeovers, with both parties seeking to protect their interests while navigating the intricacies of Spanish legislation. The outcome of this situation will undoubtedly have significant implications for both BBVA and Banco Sabadell, as well as their respective shareholders.
