BBVA has proposed a swap ratio to Sabadell in which one new BBVA share would be issued for every 4.83 Sabadell shares. The move would imply a premium of about 30 percent relative to Sabadell and BBVA closing prices on April 29, a 42 percent premium versus Sabadell’s 30-day average price, and a 50 percent premium over the last three months’ average. BBVA carries a market capitalization around 59 billion euros, while Sabadell stands at roughly 9.8 billion euros.
These are the terms outlined by BBVA chief executive Carlos Torres in the letter sent to Sabadell and disclosed to the National Securities Market Commission (CNMV) on Wednesday. The two banks had previously rejected a similar deal about three and a half years ago, when Sabadell’s value was significantly lower than it is today. Under the proposal, the exchange would be settled through the issuance of new ordinary shares, the subscription of which would be reserved for Sabadell shareholders. The shares would be admitted to trading on Spain’s continuous market and on other markets where BBVA stock is listed.
In a CNMV filing Sabadell acknowledged receipt of BBVA’s letter and stated that its board, which has not yet been convened, will thoroughly review all aspects of the proposal with due caution.
As part of the letter, BBVA also proposes the appointment of three Sabadell non-executive directors to BBVA’s governance board if the merger goes ahead. These directors would be chosen by mutual agreement between both parties, and one of them would be put forward as a vice president. BBVA argues that combining the two banks would deliver the most attractive industrial project in European banking, with the aim of creating a leading European institution capable of supporting the economy’s transformation, innovation, and decarbonization. The blended entity would be one of the strongest and most reliable financial groups in Europe, with assets exceeding one trillion euros and more than 100 million customers worldwide. BBVA also aims for the combined bank to become the eurozone’s largest by market capitalization.
BBVA contends that the deal would enable greater scale to tackle structural challenges in the sector and reach a larger customer base, while making digital transformation investments more efficient. The merged group would be solid and efficient, setting a benchmark in the market through its volume of assets, loans, and deposits.
The proposing group asserts that the merger would create clear value for shareholders. It estimates the transaction would be earnings-per-share accretive from the first year after closing, with an improvement of roughly 3.5 percent once savings from the merger, projected at about 850 million euros before taxes, are realized.
letter to the CNMV.