BBVA and Sabadell mobilize to convince 200,000 shareholders
The return from vacation will not be peaceful for BBVA and Sabadell employees. Since the start of the acceptance period for the former's hostile takeover bid for the latter yesterday, both entities have been mobilizing all resources to try to convince the Catalan bank's nearly 200,000 shareholders. The unique battle includes letters to shareholders, meetings with investors, advertising campaigns, and an army of telephone operators and employees on the ground in the office, all with the aim of deciding the biggest corporate battle in recent years.
Sabadell has a two-pronged approach and a plan of attack that goes from less to more. It will leverage its knowledge of its small shareholders to send them a letter reiterating the message conveyed last Friday by its chairman, Josep Oliu: the offer has not changed and undervalues the club. With this group, one of the keys will be to insist that doing nothing is enough to reject the proposed exchange.
The other front is that of large investors, including firms such as Blackrock, Zurich, UBS, and the Norwegian sovereign wealth fund. To convince them, Sabadell executives will participate today in a meeting with large investors in New York organized by Barclays and next week in a meeting organized by Bank of America.
Read also The key points of BBVA's takeover bid for Banc Sabadell, which begins this Monday. Pilar Blázquez
However, Sabadell's plan is to intensify the campaign after its board meeting, at which each member must publicly and individually express their opinion on the offer. The independent directors have hired Evercore for advice, while Uría Menéndez is providing legal support at the corporate level, and Goldman Sachs and Morgan Stanley are providing financial support. The board's deadline is September 18, at which time Sabadell plans to mobilize its entire arsenal. The board members are expected to reject the current proposal, barring any surprises—one of which would be an improvement in its terms by BBVA.
For its part, BBVA is already working at full speed. While it insists that its intention is not to improve the takeover bid, it will have to go all out to secure more than 50% of the voting capital to support the offer. It can lower the acceptance threshold to 30%, but that would require it to launch another all-cash takeover bid within a month. If it doesn't ultimately exceed 50%, the merger and synergies could be complicated.
Sabadell will appeal to small shareholders by letter and will travel abroad to win over the big players.The acquiring bank has set up a website where Sabadell shareholders can calculate the exchange rate and has also opened telephone lines where a manager can personally assist investors so they can accept the takeover bid "in just a few minutes" in an "easy and cost-free manner."
In one of the annexes to the takeover bid prospectus, the CNMV is informed of all the actions it plans to take to win over Sabadell shareholders. These include an open letter outlining the benefits of the transaction, a call center to answer all questions, a specific set of commercial actions, and even a WhatsApp channel .
It also includes the launch of an advertising campaign and the distribution of welcome packs to Sabadell shareholders, as well as a tour throughout Spain to meet with them. The first event is packed with symbolism. It will take place next Tuesday in Sabadell, at the Fundació 1859 Caixa Sabadell. There will be meetings in Lleida, Bilbao, Alicante, Barcelona, Terrassa, Girona, San Sebastián, and, most recently, Madrid.
The bank has also instructed its branch employees to address any questions regarding the takeover bid. It will even offer Sabadell shareholders the option of obtaining a special power of attorney to accept the offer, and will insist that it will cover the fees except in specific cases. Another issue is the payment of taxes associated with the exchange.
What's at stake is the verdict of a highly fragmented and heterogeneous shareholder base. There are thirteen shareholders who hold nearly 30% of the capital, but beyond that group, the effort to win every percentage point grows exponentially. Yesterday, BBVA shares rose 1.06%, and Sabadell's shares rose 0.8%.
Welcome packs, a symbolic event in Sabadell, a national tour, and a call center are all part of BBVA's plans.Analysts continue to believe that BBVA could improve its offer. "We are surprised that BBVA is maintaining the current terms even though Sabadell shares are trading higher," say Exane. "We think the market will continue to favor an improvement," indicate Autonomous. There is "a material risk that the 50% acceptance threshold will not be reached," so "BBVA could add an emotional component," note Kepler analysts.
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