Banco Sabadell’s shareholders are now confronted with a challenging decision , surrounded by numerous uncertainties as they navigate a potentially historic operation in Spain. Key questions linger: When is the right moment to sell? Will there be an improvement in the offer? What happens if the acceptance threshold drops to 30% ? Is another, better bid on the horizon? And how much tax will the treasury collect if they sell at current prices?
According to the latest data available from June 2024, over 196,000 shareholders are actively considering these factors following the launch of the offer for Banco Sabadell’s stock. The National Securities Market Commission (CNMV) recently provided clearance for an operation described as “the most complex” undertaken in the last 20 years, marking the 16-month journey since the hostile takeover bid (OPA) by BBVA was initially unveiled. As the process nears its conclusion, the tone set by Banco Sabadell’s management is one of cautious optimism.
What is the Calendar of the Operation?
The acceptance period for shareholders has been extended for 30 calendar days , starting from the previous Monday and lasting until October 7 . BBVA plans to announce the results of the OPA on October 14 , with shares being settled between the 17th and 20th of the same month.
Shareholders wishing to accept the offer must submit a written acceptance statement indicating where they have deposited their Sabadell shares. They can also visit a BBVA office or call the designated phone number (+34 800 080 032) for individuals.
What is the Current Offer?
BBVA’s current offer includes a combination of shares and cash . Specifically, those who choose to participate in the OPA will receive one new BBVA share plus €0.70 for every 5.5438 shares of Banco Sabadell they surrender. It’s crucial to highlight that this is BBVA’s current offer. Despite repeated assertions from BBVA’s chairman, Carlos Torres, that no improvement will be forthcoming, market speculation and analyst opinions hint at a potential enhancement to the offer, considering its attractiveness for Banco Sabadell shareholders.
Current market prices indicate that accepting the offer equates to receiving 8.5% less than if shareholders sold their Sabadell shares at prevailing rates.
Should I Pay the Treasury for the Transaction?
In principle, shareholders will need to pay tax on any capital gains—this is particularly relevant given Sabadell’s significant stock market performance in recent years. Rising interest rates initiated by the European Central Bank (ECB) since 2022 have revitalized financial entities like Banco Sabadell. Just three years ago, the stock price was a mere €0.74 per share, marking a staggering 338% increase since then. BBVA’s justification for not enhancing its bid revolves around the growth in Sabadell’s stock price spurred by the announcement of the OPA.
Shareholders who accept the offer and realize a capital gain must report it in their income tax returns, which incurs taxation between 19% and 28% , depending on the profit levels. There were initial uncertainties due to the mixed nature of the offer—shares and cash—but BBVA clarified that shareholders would not benefit from deferred taxation under the Special Mergers System.
Future Doubts: 1) An Improvement of the Offer
One of the primary uncertainties surrounding the operation in the coming weeks is whether BBVA will present an improved offer. The deadline for such a move is five days before the acceptance period concludes, which means an announcement must occur before October 2 .
What if shareholders decide to accept the current offer, and BBVA subsequently improves its proposal? In that case, shareholders will automatically receive the best offer, whether they accepted initially or not, due to the equal settlement of shares once the acceptance period ends.
Market speculation hints at a potential improvement ranging between 10% and 20% , particularly in cash incentives. This anticipation is magnified by government-imposed hurdles that would delay any merger between BBVA and Sabadell for a minimum of three years.
2) 50% to 30% Acceptance Reduction
A significant uncertainty revolves around the required acceptance threshold . BBVA aims to secure control over Sabadell, necessitating a threshold of at least 50% of voting rights for the OPA to be successful. If this threshold is not met, the operation could be declared unsuccessful, leaving both entities to continue independently.
However, the option to lower the minimum acceptance threshold from 50% to 30% remains a possibility. If implemented, BBVA must announce this change before the fifth day of the acceptance period. Should BBVA end up controlling between 30% and 50% of Sabadell’s voting rights , it would legally be required to present a new offer for the remaining shares within a month of the initial offer.
This could lead to variations in shareholder outcomes based on their timing, as BBVA would need to provide a new price proposal for CNMV review, and this new offer cannot be lower than the original OPA. As previous months’ market data suggests an average price above the original offer, there exists a chance that the revised offer could be more favorable for shareholders.