What makes BBVA's offer to Banco Sabadell shareholders attractive?
BBVA is offering Banco Sabadell shareholders the opportunity to participate in the most attractive project in the European banking industry. The integration of both banks will create a stronger, more competitive, and more profitable bank with a greater capacity to support families and businesses in their plans for the future. But apart from an undeniable strategic foundation, what will this integration mean for Banco Sabadell shareholders in terms of their personal finances?
BBVA has made an extraordinarily attractive offer to Banco Sabadell shareholders, which entails the exchange of one BBVA share and a cash payment of €0.29 for every 5,0196 shares of Banco Sabadell that they own¹.
The offer represents a 30 percent premium over closing prices on April 29th²; of 50 percent³ over weighted average prices from the previous three months; and 42 percent (8) over the volume weighted average prices from the month prior to this date.
Furthermore, considering the estimated synergies from the merger, which BBVA calculates to be approximately €850 million, Banco Sabadell shareholders will see greater profitability - with 27 percent higher earnings per share than they would receive if the bank were to continue as a separate bank⁴.
Finally, thanks to their new BBVA shares, Banco Sabadell shareholders will have the opportunity to join a global financial group present in over 25 countries. BBVA holds a leading position in the Spanish market, it is the largest financial institution in Mexico and it has leading franchises across South America and Turkey. They will become shareholders of a bank with a combination of growth and profitability that is unmatched in Europe.
Assuming an acceptance rate of 100 percent, Banco Sabadell shareholders will own around a 16 percent stake in BBVA, which will allow them to benefit from the additional value created by the combined bank, as well as an attractive dividend policy, which entails distributions of 40 to 50 percent of the annual profit (combining cash dividends and share buybacks). Furthermore, BBVA is firmly committed to distributing any excess capital over 12 percent⁵. BBVA creates value and shares it.
¹Consideration adjusted to reflect the dividend of €0.08 gross per share paid out by Banco Sabadell on October 1, 2024, as well as the dividend paid out by BBVA on October 10, 2024 (€0.29 gross per share).
²According to the terms included in the message shared with the market on May 1, 2024.
³According to the terms included in the communication to the market on May 1, 2024 and based on the volume average weighted price (VWAP) of Banco Sabadell and BBVA at the corresponding date.
⁴Increase in earnings per share (EPS) for Sabadell shareholders, calculated as the variation between the following two figures: - Initial estimated EPS in 2026: estimated EPS for Banco Sabadell of €0.24/share. This EPS is calculated as the quotient between: estimated net profit in 2026 for Banco Sabadell of €1.25 billion according to analyst consensus published in Bloomberg on April 29, 2024; and the number of Banco Sabadell shareholders after deducting the total amount of shares in the €340 million share buyback plan that the bank had in place on that date (estimated at 5.28 billion shares). - Estimated final EPS in 2026: estimated EPS in 2026 (adjusted for the initial exchange ratio of one share of BBVA for every 4.83 shares of Banco Sabadell) for the resulting bank (BBVA+Sabadell) of €0.30/share. This EPS takes into consideration: in the numerator, 1) the sum of the estimated net earnings in 2026 of BBVA and Banco Sabadell according to analyst consensus published in Bloomberg on April 29, 2024 (€8.09 billion and €1.25 billion respectively); plus 2) the net synergies (assuming complete implementation) from taxes (€603 million); in the denominator, the number of shares of the resulting bank (6.86 billion shares), considering 100 percent uptake (based on the above mentioned 5.28 billion Banco Sabadell shares), adjusted for the indicated exchange ratio.
⁵Based on the pro-forma Basel IV fully loaded ratio, subject to regulatory approval.
