Three scenarios for Banco Sabadell shareholders

Since yesterday, Sabadell shareholders have been able to exchange one newly issued BBVA share plus 70 cents gross in cash for every 5.5483 shares in their bank.

They have until October 7 , although BBVA could extend it up to 70 calendar days . If they don't accept the offer, it's understood that they've rejected it, but if they want to accept it, or at least consider it, experts emphasize that they should consider three scenarios.

1. BBVA obtains 50% of the veto rights plus one (49.3% of the share capital) of Sabadell. In this scenario, BBVA takes control of the bank and, according to the transaction prospectus, "has no intention of promoting a delisting offer for Banco Sabadell's shares in the following twelve months." Therefore, Sabadell's shares will continue to be listed for at least three years, which is the veto period imposed by the government on the merger.
2. The second possible scenario is that BBVA acquires between 30% and 50% of the bank. The bank has included in its prospectus the possibility of moving forward with the transaction if it achieves 30% of the voting rights. In this case, the takeover bid law requires BBVA to submit an offer for the entirety of Banco Sabadell. This offer must be made within one month of the settlement of the current offer and must be in cash. It is at this point that analysts point out that Banco Sabadell shareholders must consider, if they wish to participate in the transaction, whether it is worth waiting for this scenario to occur. The reason is none other than that the offer must be made at a fair price and in cash agreed upon with the CNMV and, given Sabadell's appreciation of more than 100% since BBVA's interest was announced at the end of April 2024, the price could be higher. Furthermore, if this second takeover bid were to occur, BBVA could go to the market to buy shares. BBVA is considering four scenarios if this situation were to occur (see page 17). At the same time, the bank acknowledges that it will seek to control Sabadell's board if it achieves majority support to appoint directors at a shareholders' meeting. This would also give it control, but it is still obliged to launch another takeover bid.
3. The third possibility is that BBVA fails to achieve the minimum acceptance of 30%. If this happens, the transaction would be void, as it does not meet the minimum threshold. Sabadell shareholders who participated in the exchange transaction would retain their Banco Sabadell shares, as BBVA would not execute it. The final settlement occurs at the end of the period, once the result is known.
4. A fourth scenario would exist: BBVA achieves acceptance equal to or greater than 90% of the capital. In this case, as established by law, Sabadell shares would be excluded from trading.

BBVA shares rose 1.06% yesterday, and Sabadell's shares rose 0.81%, in line with other banks. The negative premium for Sabadell shareholders thus remains at 8.66%. The market insists that BBVA will improve its offer just days before the deadline to secure at least 30% of Banco Sabadell.