Spanish Banks Takeover: Sabadell CEO Says BBVA Can't Cross 50% Threshold

Takeover Bid Rejection & Rationale - Sabadell Board rejected BBVA's €17 billion revised takeover offer, leaving the decision to shareholders [1] - The offer is considered underpriced compared to 16 months prior, offering only 153% of the combined holding versus the previous 162% [2] - BBVA's stock performance has been the worst among European stocks, diminishing the value of their offer currency [3] - Achieving a 50% acceptance rate in the initial offer is deemed impossible, potentially leading to a second offer with increased risks [4] Stock Performance & Market Dynamics - BBVA's stock price is under pressure, not solely due to the acquisition, but also due to underperformance in Mexican markets, down 16% while Spanish stocks are up 80-90% [6][7] - Over 40% of shareholders are against the deal, with acceptance levels currently below 1% [9][10] - Lowering the acceptance threshold to 30% is a possibility for BBVA, potentially leading to a second takeover offer [11][12] Potential Second Takeover Offer & Financial Implications - The chairman indicated that a second takeover offer would be equal to or superior to the first, incentivizing shareholders to wait [13] - A second offer could require BBVA to disburse up to €12 billion in cash if shareholders tender at a fixed price [14][15] - BBVA might need to reduce dividends and issue shares to cover the costs, despite having reserves [16] Shareholder Structure & Investor Sentiment - 5% of shareholders are strategic partners, 20% are passive investors, and 35% are long-only/hedge funds with divided opinions on the deal's long-term value [19][20][21] - Institutional investors are hesitant due to potential overhang on BBVA shares from the need to raise or use €12 billion in cash [22] - One institutional investor, David Martinez, has chosen to take the tender offer, but he is considered a unique, distressed investor [22][23] Banco Sabadell's Future & Strategy - Banco Sabadell emphasizes its autonomy of management and independence for the next 3-5 years, with brand continuity, no branch closures, and no layoffs [29][30] - The bank is a "capital generation machine" with a return on tangible equity expected to reach 16% [34] - Banco Sabadell plans to return 40% of the market cap value per share to shareholders in the next 25 years [34] - The bank's interim dividend is higher than BBVA's, paying out 7% cents per share with a commitment to offer another 7% [35] - Banco Sabadell is growing and gaining market share while maintaining a core Q1 above 13%, higher than BBVA's committed 12% [37][38]