European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Banco de Sabadell’s Q2 2024 results highlight strong performance, strategic progress, and effective capital management.</li>
<li>Sabadell is currently trading at a 0.89x P/TBV (vs. 5-y 0.41x average), accurately representing its profitability and RoTE outlook. It is also trading at 7.5x Fwd P/E.</li>
<li>BBVA’s takeover bid is unlikely to succeed unless BBVA enhances the share exchange ratio or includes some cash. Gross spread (1 BBVA x 4.83 SAB) is just 3.4%.</li>
</ul>


Banco de Sabadell’s Q2 2024 results highlight strong performance, strategic progress, and effective capital management.
Sabadell is currently trading at a 0.89x P/TBV (vs. 5-y 0.41x average), accurately representing its profitability and RoTE outlook. It is also trading at 7.5x Fwd P/E.
BBVA’s takeover bid is unlikely to succeed unless BBVA enhances the share exchange ratio or includes some cash. Gross spread (1 BBVA x 4.83 SAB) is just 3.4%.


BBVA/Sabadell: Deal Uncertainty Grows After Sabadell's Results

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>With the MSCI ACWI (ACWI-US) approaching the top-end of our expected 2023 trading range at $93, we see limited upside from here, and we believe caution is warranted.</li>
<li>We want to remain overweight Europe and the UK, but we prefer to buy only on pullbacks.</li>
<li>The Hang Seng and MSCI China (MCHI-US) are both getting rejected at their important resistances discussed last week, and we would expect to see a basing process develop below resistance.</li>
</ul>


With the MSCI ACWI (ACWI-US) approaching the top-end of our expected 2023 trading range at $93, we see limited upside from here, and we believe caution is warranted.
We want to remain overweight Europe and the UK, but we prefer to buy only on pullbacks.
The Hang Seng and MSCI China (MCHI-US) are both getting rejected at their important resistances discussed last week, and we would expect to see a basing process develop below resistance.


Caution Warranted; ACWI-US At $93 Resistance; Buys in Communications, Staples, Materials, Financials

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Colour me perplexed. Murakami Group ran up <a href="https://www.smartkarma.com/entities/mitsui-matsushima-co-ltd" target="_blank" data-smartkarma-citation="entities:13569:1" rel="noopener">Mitsui Matsushima (1518 JP)</a>'s share price in acquiring 29%. The pattern was clear, but one assumes everyone in-group was on the same page.</li>
<li>Two activist shareholders. And long only upping its stake. Heavily discounted <a href="https://www.smartkarma.com/entities/china-merchants-china-direct-investments" target="_blank" data-smartkarma-citation="entities:6862:1" rel="noopener">China Merchants China Direct Investments (133 HK)</a> is in play.</li>
<li>A HUGE new buyback for <a href="https://www.smartkarma.com/entities/kansai-paint-co-ltd" target="_blank" data-smartkarma-citation="entities:13340:1" rel="noopener">Kansai Paint (4613 JP)</a>. Really big. Buy Kansai Paint vs Nippon Paint. One can buy the pop. One can buy any dips after the pop. </li>
</ul>


Colour me perplexed. Murakami Group ran up Mitsui Matsushima (1518 JP)'s share price in acquiring 29%. The pattern was clear, but one assumes everyone in-group was on the same page.
Two activist shareholders. And long only upping its stake. Heavily discounted China Merchants China Direct Investments (133 HK) is in play.
A HUGE new buyback for Kansai Paint (4613 JP). Really big. Buy Kansai Paint vs Nippon Paint. One can buy the pop. One can buy any dips after the pop. 


Last Week in Event SPACE: Mitsui Matsushima, China Merchants,Kansai Paint, Teijin, Sciclone Pharma

<ul>
<li>On 24 May, <a href="https://www.smartkarma.com/entities/banco-bilbao-vizcaya-argentari" target="_blank" data-smartkarma-citation="entities:21251:1" rel="noopener">Banco Bilbao Vizcaya Argentari (BBVA SM)</a> submitted the authorisation request for its all-stock offer for <a href="https://www.smartkarma.com/entities/banco-de-sabadell-sa" target="_blank" data-smartkarma-citation="entities:21295:1" rel="noopener">Banco De Sabadell SA (SAB SM)</a>. Closing expected to take 6-8 months.</li>
<li>Gross spread (CSP 27 May) is 7.6%, which This translates in a 52% implied probability of deal success. The fixed income market appears to share this view.</li>
<li>Nevertheless, from a long-only perspective, the risk/reward of Sabadell is interesting. The deal values Sabadell's shares at €2.07 each, an implied equity value of €11,187 million, for a 0.92 P/TBV.</li>
</ul>


On 24 May, Banco Bilbao Vizcaya Argentari (BBVA SM) submitted the authorisation request for its all-stock offer for Banco De Sabadell SA (SAB SM). Closing expected to take 6-8 months.
Gross spread (CSP 27 May) is 7.6%, which This translates in a 52% implied probability of deal success. The fixed income market appears to share this view.
Nevertheless, from a long-only perspective, the risk/reward of Sabadell is interesting. The deal values Sabadell's shares at €2.07 each, an implied equity value of €11,187 million, for a 0.92 P/TBV.


BBVA Files Hostile Offer: Conditions, Defences and Probabilities

<ul>
<li>On 6 May, the Board of Sabadell rejected the merger proposal as "it significantly undervalues its growth prospects and is not aligned with the interests of its customers and shareholders".</li>
<li>BBVA could take the offer directly to Sabadell shareholders, but a hostile offer seems extremely unlikely and there are no precedents in the Spanish banking sector.</li>
<li>I find it unlikely that both parties reach an agreement because the terms would likely be unfavourable for BBVA (premium 40%-50%). Market sentiment also suggests a low probability.</li>
</ul>


On 6 May, the Board of Sabadell rejected the merger proposal as "it significantly undervalues its growth prospects and is not aligned with the interests of its customers and shareholders".
BBVA could take the offer directly to Sabadell shareholders, but a hostile offer seems extremely unlikely and there are no precedents in the Spanish banking sector.
I find it unlikely that both parties reach an agreement because the terms would likely be unfavourable for BBVA (premium 40%-50%). Market sentiment also suggests a low probability.


Spain

Banco Bilbao Vizcaya Argentaria, S.A. attracts deposits and offers retail, wholesale, and investment banking services.  The Bank offers consumer and mortgage loans, private banking, asset management, insurance, mutual funds, and securities brokerage services.  It operates in Europe, Latin America, United States, China and Turkey.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Banco Bilbao Vizcaya Argentari (BBVA SM)

BBVA/Sabadell: Deal Uncertainty Grows After Sabadell's Results

Banco de Sabadell's strong Q2 performance and strategic progress may deter BBVA's takeover bid without improved terms. Trading at 0.89x P/TBV and...

Jesus Rodriguez Aguilar

Caution Warranted; ACWI-US At $93 Resistance; Buys in Communications, Staples, Materials, Financials

With the MSCI $ACWI approaching the top-end of our expected 2023 trading range at $93, we see limited upside from here and believe caution is...

Vermilion Research

Last Week in Event SPACE: Mitsui Matsushima, China Merchants,Kansai Paint, Teijin, Sciclone Pharma

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

BBVA Files Hostile Offer: Conditions, Defences and Probabilities

BBVA submits authorization request for all-stock offer for Sabadell, with deal expected to close in 6-8 months. Gross spread indicates 52%...

Jesus Rodriguez Aguilar

Hostile or Not?

Sabadell rejects merger proposal from BBVA, citing undervaluation and misalignment with interests. Hostile offer unlikely, agreement improbable...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

BBVA/Sabadell: Deal Uncertainty Grows After Sabadell's Results

​Banco de Sabadell's strong Q2 performance and strategic progress may deter BBVA's takeover bid without improved terms. Trading at 0.89x P/TBV and...

Jesus Rodriguez Aguilar

Caution Warranted; ACWI-US At $93 Resistance; Buys in Communications, Staples, Materials, Financials

With the MSCI $ACWI approaching the top-end of our expected 2023 trading range at $93, we see limited upside from here and believe caution is...

Vermilion Research

Last Week in Event SPACE: Mitsui Matsushima, China Merchants,Kansai Paint, Teijin, Sciclone Pharma

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

BBVA Files Hostile Offer: Conditions, Defences and Probabilities

​BBVA submits authorization request for all-stock offer for Sabadell, with deal expected to close in 6-8 months. Gross spread indicates 52%...

Jesus Rodriguez Aguilar

Hostile or Not?

​Sabadell rejects merger proposal from BBVA, citing undervaluation and misalignment with interests. Hostile offer unlikely, agreement improbable...

Jesus Rodriguez Aguilar

Banco de Sabadell's strong Q2 performance and strategic progress may deter BBVA's takeover bid without improved terms. Trading at 0.89x P/TBV and...

BBVA submits authorization request for all-stock offer for Sabadell, with deal expected to close in 6-8 months. Gross spread indicates 52%...

Sabadell rejects merger proposal from BBVA, citing undervaluation and misalignment with interests. Hostile offer unlikely, agreement improbable...