The head of BBVA’s Spanish subsidiary, Peio Belausteguigoitia, insisted on Wednesday that the group has no plans to raise its bid for Sabadell, which Sabadell’s board rejected for reasons including the bid being too low. The Bilbao-based group has repeated that stance since unveiling its hostile approach in May and has not changed course after adjusting the terms on Monday in response to dividends approved by both banks.
“The offer is very attractive and that will continue to be our exchange ratio,” the banker stated during a talk at the Fundació Gresol in Reus, as part of BBVA’s campaign to engage with Catalan society amid the takeover bid. Belausteguigoitia downplayed the adjustment to the offer caused by dividends; it was announced when the offer was launched and is customary in this type of operation.
Analysts say it is common to deduct dividends from purchase offers because the company being acquired loses value when profits are distributed to shareholders. The most relevant consequence here is that Sabadell owners who accept the offer would receive part of the payment in cash and not only in Sabadell shares, as initially stated.
Cash Component
The BBVA, thus, has discounted from its offer the 0.08 euros per share paid by Sabadell to its shareholders this Tuesday as a dividend. Consequently, the exchange ratio moves from one new BBVA share for every 4.83 Sabadell shares to one new BBVA share for every 5.0196 Sabadell shares. In addition, the Basque bank will pay a dividend of 0.29 euros per share to its own shareholders on October 10, which adds to the offer for Sabadell holders. In other words, the offer becomes one new BBVA share plus 0.29 euros in cash for every 5.0196 Sabadell shares.
If all Sabadell shareholders accepted the offer, a scenario considered unlikely given the public opposition from some, the cash outlay would be around 314 million euros. In that case, Sabadell shareholders would hold a maximum stake in the merged entity of about 15.65% from the previous 16.17%.