BBVA warns US investors of Cuerpo’s continued rejection of the takeover bid, but considers it unlikely to block it

September 23 () –

Last Friday, BBVA updated the US prospectus for the takeover bid (OPA) for Banco Sabadell to reflect the continued rejection of the operation expressed by the Minister of Economy, Trade and Business, Carlos Cuerpo.

Specifically, BBVA states in the document that Cuerpo expressed its opposition to the takeover bid and the merger of BBVA with Banco Sabadell on May 10, one day after the proposal was made public. Since then, it has maintained its opposition whenever it has been publicly asked about it.

In any case, the bank warns that the minister’s position is being taken before having seen the reports from the European Central Bank (ECB), the National Securities Market Commission (CNMV), the Directorate General of Insurance or the money laundering prevention unit (Sepblac).

The bank led by Carlos Torres also points out that the minister has spoken “before the review and analysis of the proposal by the Ministry’s technicians.”

“BBVA is not aware of any precedent of a Spanish operation in which the merger after taking control of a credit institution has not been authorized by the Ministry of Economy,” the bank states in the prospectus, which is why it considers its veto to be a “very remote” possibility.

The prospectus update, which does not detail any material changes to the conditions or effectiveness of the offer, also focuses on explaining in more detail the operations that BBVA can execute with Banco Sabadell shares.

Having launched a takeover bid, and in order to maintain the neutrality of the operation, BBVA is prohibited by both the CNMV and the SEC from purchasing Sabadell shares on its own.

In the case of the CNMV, this prohibition has certain exemptions when it comes to client transactions in the normal course of their business. In the case of the US market, BBVA has to request it from that country’s stock market regulator, the SEC. The bank requested authorization and was granted it on May 29.

In the updated document, BBVA also delves into the potential risks of not being able to achieve all the benefits and synergies expected by completing the takeover bid.

The bank maintains that the merger is in the interest of saving 850 million euros per year, for which it will incur restructuring costs of 1.45 billion euros. In the new document, the bank includes the possibility that if the merger does not go through, it is “unlikely” that all the effects of these synergies will be achieved.

“Even if the merger is not completed, [el banco] will be able to centralize certain Banco Sabadell processes in BBVA and operate both banks from a joint IT platform with multi-bank functionalities for all products, services and systems,” the entity states.