Carlos Torres Vila: “We will surpass 50 percent because it’s an exceptional offer. A second takeover bid is uncertain and BBVA would never proceed unless the price remained the same”

Carlos Torres Vila reiterated to EFE the reasons why, in his view, this is an exceptional opportunity that Banco Sabadell shareholders should seize. He recalled that when the bank launched the offer it already included a very significant premium, much higher than other recent successful operations. “There’s also an increase in the value of our shares since it’s a share-based offer. If we look at the offer today, the value is more than 60 percent higher than the value when we first announced it. It’s an offer that values Sabadell at all-time highs: €17 billion in total and a share price of €3.39,” he underscored. “When we began this process, in the initial discussions [April 2024], Sabadell was trading at €1.45. €1.45 compared to €3.39, the value of the improved offer as of last Monday [September 22],” he added.

In addition to the economic appeal, Torres Vila emphasized to EFE the strategic rationale of the transaction for Sabadell shareholders: “We are inviting them to become part of a project with the highest profitability and growth in Europe, and a project that creates value.” According to him, the integration of both entities would allow Banco Sabadell shareholders to obtain, following the merger, earnings per share 41 percent higher than what they would achieve with a standalone Sabadell.

For all this, he insisted: “We will exceed 50 percent. We are absolutely confident of that because of how exceptional this offer is.”

"We will exceed 50 percent. We are absolutely confident of that because of how exceptional this offer is"

Regarding the volume of acceptances, the BBVA Chair highlighted the “widespread support” among Banco Sabadell’s institutional shareholders, while clarifying that the bank does not yet have complete information on how many shareholders have tendered their shares to date: “Their formal acceptance is only reported by the custodians and their international custodians at the end of the process.” He also confirmed that BBVA is already receiving acceptances from retail shareholders from Banco Sabadell: “Retail shareholders are already accepting directly the offer. We are not releasing figures yet because they are very preliminary, given that many of the acceptances are also being processed at other banks and that information has yet to arrive. But I can confirm that  we are seeing Banco Sabadell shareholders and customers coming in to tender their shares and accept the offer at BBVA at our branches.”

In regards to the possibility that BBVA only reaches 30 percent of Banco Sabadell, Torres Vila was categorical: “We are absolutely convinced that we will exceed 50 percent in the transaction and, therefore, we don’t see that as a possibility.”

In response to a question from EFE he sought to dispel doubts about a possible second cash takeover bid: “A lot has been said about this, often adding to the confusion. The truth is that this supposed second bid is very uncertain, because in the scenario where we exceed 50 percent, which we are absolutely convinced will occur, a second bid won’t happen. But even if we only get somewhere between 30 percent and 50 percent, a second bid would depend entirely on BBVA’s willingness to waive the minimum acceptance condition of 50 percent. As the prospectus clearly states, we have no intention of doing so.”

“The bottom line is that shareholders should accept the offer now. There’s no reason to wait. And that’s because the hypothetical, uncertain possibility of a second takeover bid offers no appeal compared to the offer that is already on the table. It is not attractive—not in terms of price, not in terms of timing, and not in terms of tax treatment.”

"The hypothetical, uncertain possibility of a second takeover bid offers no appeal compared to the offer that is already on the table. It is not attractive—not in terms of price, not in terms of timing, and not in terms of tax treatment"

First, on price, he indicated that “the hypothetical second takeover bid—which, I repeat, would only take place if BBVA decided to move forward and waive the condition—would be at the same price as the current offer, always, because it would reflect the cash equivalent of the offer we’ve already made. BBVA would propose the price of the second offer (which would be calculated as the cash equivalent of the current offer, as established in Article 9 of the Spanish Takeover Bids Royal Decree), and it would be up to the CNMV to confirm the calculation. In this regard, the BBVA Chair said that “BBVA would never waive the condition and therefore would never proceed with that second bid unless the price remained the same.” It should be noted that this potential second takeover bid is mandatory by law and, therefore, BBVA would have no incentive—should it hypothetically and uncertainly proceed with it—to offer a price higher than that of the current voluntary bid.

Second, on timing, he stressed that “a hypothetical second offer would take several months to become effective, because it would require going through the entire process. In contrast, the current offer is available to be accepted now. So, why wait months to accept an offer you can take up today?”

And third, regarding tax treatment, there would not be any advantage with a second takeover bid, quite the opposite: “That hypothetical second takeover bid, being in cash, would be subject to taxation. Shareholders in Spain would have to pay capital gains tax.”

From his perspective, “there’s nothing to be gained by waiting. What makes sense is for interested shareholders—those who see the value in this integration—to tender their shares as soon as possible, within the current timeline, which runs until October 10. There’s no time to lose. We invite them and our doors are open so they can do so easily and at no cost, at BBVA. And once again, I encourage them to do so without delay.”

"What makes sense is for interested shareholders—those who see the value in this integration—to tender their shares as soon as possible, within the current timeline, which runs until October 10."

Carlos Torres Vila also addressed the dividend that Banco Sabadell shareholders would receive from the recent sale of its U.K. unit TSB: “A dividend doesn’t in itself create value. It’s a distribution to the owners—the shareholders—of something they already own. It is also reflected in the offer presented to Banco Sabadell shareholders. What happens when a dividend is paid is that the market adjusts the price downward. In other words, the dividend is already priced in. When it is paid out, the price drops by the amount of the dividend because what’s been distributed is something they already owned.” In this sense, he stressed that “what truly matters is the ability to generate dividends in the future, not the distribution of those already generated. And here, I’ll repeat what I’ve already said: the merger enables us to create value together.”

The BBVA Chair sent a direct message to Banco Sabadell shareholders: “The offer on the table is exceptional, both on its own terms and by virtue of the wider enterprise they would be joining: a project that is already a European leader in profitability, already a leader in growth across Europe, a project that, through this integration, has the potential to generate even greater value together.”

“In short, it means getting on board a project that will provide a much stronger source of future dividends than the alternative—which would be not to tender their shares and remain shareholders of a far smaller Banco Sabadell, especially now, after the sale of TSB. It would be a less diversified bank, one with all its eggs in a single basket. And that’s the comparison they need to make, in a context where Europe increasingly requires banks with the necessary scale and efficiency to meet the challenges ahead,” he added.

Carlos Torres Vila also addressed Banco Sabadell retail shareholders who are also customers: “The union will give them access to a branch network more than twice the size of what they have today, an ATM network nearly three times as large, and, of course, the same relationship managers as always, offering the same level of proximity and personal service”. Likewise, regarding Banco Sabadell’s SME customers, the Chair recalled BBVA’s five-year commitment to maintaining existing credit volume: “A commitment no one else could give,” he said.

“In conclusion, I would urge all Banco Sabadell shareholders, whether they are customers or not, to accept our exceptional offer. The time is now, and until October 10. There’s no time to lose: don’t leave it to the last minute. Our doors are open to receive their acceptances—free of charge and with every convenience—at any of our branches, over the phone, or through digital channels,” he concluded.