Banco Sabadell Defends Against BBVA’s Full Acquisition Offer
Banco Sabadell continues its defense strategy against the cash offer for its entire share capital made by BBVA. In a letter addressed to shareholders, the bank’s chairman, Josep Oliu, reminded them of the commitment to return value estimated at 2.4 billion euros. The administration has pledged to distribute 45 cents per share, charged to 2024 and 2025, to shareholders as part of this package, according to Oliu.
In the document, Sabadell also highlights its latest results for 2023. It notes a dramatic turnaround from a 2 million euro profit in 2020 to 1.332 billion euros two years later. As a consequence, the stock price rose from about 0.35 euros at the end of 2020 to around 1.91 euros on May 24, the date BBVA filed with the CNMV to obtain approval for the offer. The board states that the entity’s profitability could keep climbing. In the first quarter of 2024, the return on tangible equity, or ROTE, reached 12.2%, higher than 2023 and in line with the 2024 projection. For 2025, the board expects ROTE to exceed its 2024 level.
Regarding timelines, the bank’s president indicated that shareholders need not act immediately, as the process could extend to the end of the current year or even early next year. They will decide after the offer is made public and the board issues a public, detailed recommendation. Oliu reiterated the commitment to creating value for shareholders, serving clients, and maintaining employment. He also noted that current law imposes a “duty of passivity” on the board and that the letter serves to inform shareholders about the operation and the reasons for rejecting BBVA’s previous proposal.
Additional Reasons to Reject the Offer
About a week ago, Sabadell leveraged the publication of its Universal Registration Document, a filing required by European rules for listed entities, to argue how BBVA’s offer could harm Sabadell and its shareholders. The bank warned of uncertainties surrounding strategic agreements with other firms in areas like life and general insurance and potential costs if those agreements were terminated. It also stated that it is not possible to predict the duration of regulatory and CNMV review and whether the offer, if approved, would proceed to completion.
Earlier, on May 14, Sabadell temporarily paused its share repurchase and cancellation program at the CNMV’s request. The bank had bought shares valued at 92.86 million euros, representing roughly 27.31% of the program’s maximum. Its autocartera stood at 1.45% of its own shares, a level the BBVA offer could not meet given the 50.01% threshold required to move forward. The bank’s main shareholders currently include BlackRock, Dimensional Fund Advisors, investor David Martínez Guzmán, Millennium Group Management, Norges Bank, and Vanguard Total International Stock Index Fund, with holdings ranging from about 1.3% to 3.9%. [Source: Sabadell regulatory filings and investor disclosures]