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Investing.com -- Banco Bilbao Viscaya Argentaria SA ADR (NYSE:BBVA) (BME:BBVA) said it has lifted the estimated impact on its capital ratio due to its ongoing takeover bid for Banco de Sabadell SA (BME:SABE)
The Spanish bank now expects a 51 basis point impact, a revision from the 38 basis points previously estimated.
This adjustment comes as BBVA modifies its offer in the hostile takeover attempt, which includes changes to the cash component and share exchange ratio to account for dividend payments and a significant share buyback program.
BBVA launched a €12.28 billion all-share bid for Sabadell in April of the previous year. The bid turned hostile in May when Sabadell resisted the takeover.
Initially, BBVA had forecasted a 30 basis point hit to its capital ratio, which was later revised to 38 basis points in October to accommodate various factors, including dividend payments.
The latest terms disclosed to the U.S. Securities and Exchange Commission (SEC) detail that BBVA will offer one newly issued BBVA share plus €0.70 in cash for every 5.3456 Sabadell shares. This marks an increase from the initial offer of €0.29 in cash for every 5.0196 Sabadell shares.
The revised offer reflects upcoming dividend payments of €0.41 per BBVA share and €0.1244 per Sabadell share, scheduled for April 10 and March 28, respectively.
In addition to the takeover bid adjustments, BBVA is also incorporating the effects of its €993 million share buyback program into the capital ratio calculations.
Assuming the exchange offer is fully accepted and all of Sabadell’s capital is accounted for, BBVA projects a core tier-1 capital ratio of 12.37% by the end of 2024, inclusive of restructuring costs.
The initial offer from BBVA was one new share for 4.83 Sabadell shares, representing a 30% premium over Sabadell’s closing price on April 29, 2024.
However, if the merger does not fully materialize and BBVA only acquires a majority of Sabadell’s voting rights, the negative impact on BBVA’s capital ratio could be approximately 62 basis points, or 49 basis points when excluding restructuring costs.
Under this scenario, the estimated capital ratio at the end of December would stand at 12.26%.