Rumors that had suggested for weeks that the CNMC was going to make the decision regarding BBVA’s takeover bid for Sabadell for the second phase were confirmed this Tuesday by the public entity. The organization has decided that the first phase of study is not sufficient, as on other occasions, and considers it necessary to move on to phase II, in an analysis that will last until 2025.
“The operation requires further analysis,” indicates the organization in the press release published this Tuesday at the close of markets. The Competition Chamber adopted its decision “taking into account the circumstances of the transaction and its potential impact on the maintenance of effective competition.”
Regardless, what consequences could this decision have? From Bankinter they explain that “this is bad news, because it extends the uncertainty about the result until the first half of 2025 since it would have three months to decide and the approval of the CNMV is missing” . “Furthermore, this reduces the likelihood of success of the transaction as it increases the possibility that competition will increase the demands on BBVA to authorize the tender offer, which could have a negative impact on synergies and profitability initially expected,” he adds.
However, there was a reaction on the online trading floor with a lower probability of success and Analysts also did not make any reductions valuation or recommendation that rules out this scenario which is now strengthening and which is in line with the statements of BBVA CEO Onur Genç this Wednesday, in which he emphasizes that although he has confidence in the approval, in the event that lose the potential value of the operation, they would abandon it. “We clearly believe in the value creation potential of the operation for the shareholders of BBVA and Sabadell and for society in general,” Genç said at a financial conference organized by Deloitte and ABC. “But if the potential is compromised, we have the option to leave. We will not hesitate for a second to withdraw if that is the case,” he added.
Thus, analysts who cover these two companies and updated their estimates between Tuesday and Wednesday did not make significant reductions beyond CaixaBank, which reduced Sabadell’s price target from 2% to 2 .15 euros. If, hypothetically, the public purchase offer failed, BBVA would recover part of the value lost during these months due to the capital increase it would have to carry out to buy Sabadell while the latter would cease trading with the premium that the bank put. on the table.
It should be remembered that this premium, when the terms of the operation were announced, exceeded 25% taking into account the prices of the two shares on the stock market and their exchange parity. Now this extra for the Catalan shareholder barely exceeds 1.5%. “We continue to believe that the likelihood of a takeover bid is reduced if BBVA does not improve the exchange rate equation and/or increase the cash payment,” they say at Bankinter.
In Renta 4 they comment that “the main implication of the CNMC decision is the lengthening of the terms and, therefore, a greater period of volatility and uncertainty for both listings”. “We do not believe that the conditions that the CNMC could establish for BBVA to approve the operation will force the entity to abandon its offer and we believe that the most feasible scenario is that of conditions acceptable to the bank, if the uncertainty regarding the impact on the workforce increases, making the operation less attractive,” they conclude.
