Since launching the takeover bid, BBVA’s objective was to acquire a majority stake in Banco Sabadell. The offer has been conditioned from the beginning on surpassing this threshold, which would allow BBVA to take control of the entity without opposition. However, the new version of the issuance prospectus registered with the Securities and Exchange Commission (SEC) states that the takeover bid will not be completed if it does not exceed the 50.01% threshold. The bank also outlines its plans in case the bid is successful, but a merger does not occur, as well as the risk of needing additional capital in certain scenarios.
The new document, like previous versions, details the conditions under which the takeover bid is subject to. It lists pending conditions, including obtaining acceptance from 50.01% of Banco Sabadell’s capital and competition authority approval. The new version of the prospectus firmly states in four different places that BBVA has no intention of waiving the condition requiring the acceptance of at least 50.01% of Banco Sabadell’s capital. This statement before the U.S. market regulator adds weight to BBVA’s commitment to achieving this threshold.
For BBVA, reaching the 50.01% threshold is crucial as it would give them control of the shareholders’ meeting (and therefore the board of directors) and ensure that shareholders vote on the proposed merger following the bid. Even in the absence of a merger, a majority stake allows for decisions to be made to extract synergies from the integration, such as using a unified technological platform. The prospectus also outlines BBVA’s plans in the event that the planned merger is not approved by the Ministry of Economy, emphasizing operational improvements and efficiencies that the takeover bid would still provide.
In terms of risk considerations, the prospectus now includes a section highlighting potential negative impacts on BBVA’s capital ratio, leverage, liquidity, MREL, and resolution profile resulting from the takeover bid. The document acknowledges limited ability to anticipate all losses, costs, and liabilities from the bid due to lack of access to non-public information regarding Banco Sabadell. Additionally, the bid may elevate BBVA’s systemic importance within the Spanish financial system, potentially leading to regulatory requirements for additional capital or liquidity.
Regarding financial details, the revised prospectus lowers BBVA’s estimated badwill (negative goodwill) from the Sabadell acquisition, signaling a reduction in the accounting gain from paying below the fair value of Sabadell’s assets. The estimated impact on BBVA’s capital as a result of the operation has also been adjusted. The document clarifies the cash component of the offer and outlines BBVA’s financing plans for the acquisition, including using corporate funds for cash consideration. Updates on regulatory authorizations obtained for the transaction are also provided.
In summary, the new version of the prospectus for BBVA’s takeover bid of Banco Sabadell outlines the bank’s commitment to achieving a majority stake, outlines contingency plans in case of a failed merger, highlights potential risks, and provides updates on financial estimates and regulatory approvals. BBVA’s clear stance on the 50.01% acceptance threshold and strategic direction in case of different outcomes demonstrate a meticulous approach to the acquisition process. The document provides a comprehensive overview of the bid’s implications for both banks and their stakeholders, as well as the potential synergies and challenges of the proposed merger.
