425: BBVA Seeks Shareholder Approval for Capital Increase to Fund Banco de Sabadell Acquisition

BBVA is seeking shareholder approval for a capital increase to finance its voluntary tender offer for the acquisition of Banco de Sabadell.

Summary

• Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) is seeking shareholder approval for a capital increase with non-cash contributions to fund its voluntary tender offer for the acquisition of Banco de Sabadell, S.A.
• The proposed capital increase aims to facilitate the exchange of shares held by Banco de Sabadell shareholders who accept BBVA's offer.
• BBVA plans to issue up to 1,126,339,845 new ordinary shares at a nominal value of EUR 0.49 each, totaling a maximum nominal amount of EUR 551,906,524.05.
• The consideration for the offer is one newly issued BBVA share for every 4.83 ordinary shares of Banco de Sabadell.
• J.P. Morgan and UBS have provided letters confirming that the price offered by BBVA for 100% of Banco de Sabadell's shares is deemed reasonable from a financial standpoint under current market conditions.
• The offer is contingent upon authorization from the Spanish National Securities Market Commission (CNMV) and approval of the capital increase by BBVA's General Shareholders Meeting.
• BBVA may exercise its right to demand the compulsory sale of the remaining shares of Banco de Sabadell (squeeze-out) if the requirements established in articles 116 of the Securities Market Act and article 47 of Royal Decree 1066/2007 are met.
• The Board of Directors is seeking authorization to execute the capital increase in one or more rounds and to amend the company's bylaws accordingly.

Sentiment

Score: 7

Explanation: The document is largely factual and procedural, outlining the steps for a major acquisition. The sentiment is cautiously positive, reflecting the potential benefits of the merger but also acknowledging the inherent risks and uncertainties.

Positives

• The acquisition of Banco de Sabadell could create synergies and improve BBVA's market position.
• Independent financial advisors deem the offer price reasonable.
• The capital increase is structured to accommodate different levels of acceptance of the offer.
• BBVA has secured letters from J.P. Morgan and UBS confirming the financial reasonableness of the offer.

Negatives

• The capital increase will dilute existing BBVA shareholders' ownership.
• The acquisition is subject to regulatory approvals, which may not be granted or may be delayed.
• Integration of Banco de Sabadell may present challenges and risks.
• The success of the offer depends on the acceptance of Sabadell's shareholders.

Risks

• Failure to obtain regulatory approvals could prevent the acquisition.
• Lower-than-expected acceptance of the offer could impact the expected benefits of the transaction.
• Integration challenges could lead to higher costs and lower synergies than anticipated.
• Disruption of management time from ongoing business operations could negatively impact performance.
• Adverse effects on the market price of BBVA shares due to matters relating to the transaction.
• Potential adverse effects on the ability of BBVA or Banco Sabadell to retain customers and key personnel.

Future Outlook

BBVA anticipates completing the acquisition of Banco de Sabadell, subject to regulatory and shareholder approvals, and expects to realize synergies from the combined entity. The company undertakes no obligation to update or revise any forward-looking statements.

Management Comments

• The Board of Directors of BBVA has received letters from J.P. Morgan and UBS confirming that the price offered by the Bank for the acquisition of 100% of the shares of the Affected Company is deemed reasonable for BBVA from a financial standpoint and under current market conditions.

Industry Context

This announcement reflects the ongoing consolidation trend in the European banking sector, as institutions seek to improve efficiency and competitiveness through mergers and acquisitions. BBVA's pursuit of Banco de Sabadell aligns with this trend, aiming to create a stronger, more diversified financial institution.

Comparison to Industry Standards

• The offer of one newly issued BBVA share for every 4.83 shares of Banco de Sabadell is a standard share exchange ratio common in merger and acquisition deals within the financial sector.
• Comparable transactions, such as the merger between CaixaBank and Bankia, also involved share exchange ratios and capital increases to facilitate the acquisition.
• The involvement of J.P. Morgan and UBS in providing fairness opinions is a common practice in large-scale M&A transactions, ensuring that the offer price is deemed reasonable from a financial perspective.

Stakeholder Impact

• Shareholders of BBVA will experience dilution of their ownership.
• Shareholders of Banco de Sabadell will have the opportunity to exchange their shares for BBVA shares or cash.
• Employees of both BBVA and Banco de Sabadell may be affected by potential restructuring and synergies.
• Customers of both banks may experience changes in products and services as a result of the merger.

Next Steps

• BBVA will seek approval for the capital increase at the General Shareholders Meeting.
• BBVA will seek authorization from the CNMV for the tender offer.
• BBVA will publish an explanatory prospectus for the offer.
• BBVA will apply for admission to trading of the new shares on relevant stock exchanges.
• The Board of Directors will execute the capital increase in one or more rounds, depending on the outcome of the offer.

Key Dates