European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

CaixaBank - Bankia Negotiations:La Caixa, Approvals, Badwill, Exchange Ratio and Synergies

CaixaBank-Bankia Merger Conversations Announcement: First Take

Bankia - CaixaBank: Merger in Progress, Spread Attractive

Event-Driven

<a href="https://www.smartkarma.com/entities/caixabank-sa" target="_blank" data-smartkarma-citation="entities:21255:1" rel="noopener">CaixaBank SA (CABK SM)</a> 's EGM approved on 3 December the integration with <a href="https://www.smartkarma.com/entities/bankia-sa" target="_blank" data-smartkarma-citation="entities:21252:1" rel="noopener">Bankia SA (BKIA SM)</a> , whilst Bankia's EGM did the same on 1 December.
The merger project establishes an exchange of 0.6845 new CaixaBank shares for each Bankia share. The swap means that CaixaBank shareholders will control 74.2% of the capital of the new entity, and those of Bankia 25.8%. The FROB, which has almost 62% of the current Bankia, will now control 16.1% in the combined entity.
<ul>
<li>Gonzalo Gortázar, CEO of CaixaBank, told shareholders that the integration will be profitable in less than three years.</li>
<li>The entities estimate restructuring costs of around €2,200 mn, equivalent to less than three years of the expected annual gross savings of €770 mn per year from 2023.
<ul>
<li>Roughly 42% of Bankia's cost base at end of FY 2019.</li>
</ul>
</li>
<li>Based on the market consensus, ROTE of the merged entity could rise to 8.2% within two years and EPS could improve 28%.
<ul>
<li>Vs. ROTEs of CaixaBank at 5% and Bankia at 1.9% at Q3 2020.</li>
</ul>
</li>
</ul>
This merger will close and the spread shows it.
<ul>
<li>Gross spread of 1.6% on 7 December.</li>
<li>I recommend keeping an eye on the spread: it often reaches c. 2% gross (c. 8% annualised) during intraday trading.</li>
<li>Recommendation is Long 1 Bankia / short 0.6845 CaixaBank.</li>
</ul>

CaixaBank SA (CABK SM) 's EGM approved on 3 December the integration with Bankia SA (BKIA SM) , whilst Bankia's EGM did the same on 1 December.
The merger project establishes an exchange of 0.6845 new CaixaBank shares for each Bankia share. The swap means that CaixaBank shareholders will control 74.2% of the capital of the new entity, and those of Bankia 25.8%. The FROB, which has almost 62% of the current Bankia, will now control 16.1% in the combined entity.

Gonzalo Gortázar, CEO of CaixaBank, told shareholders that the integration will be profitable in less than three years.
The entities estimate restructuring costs of around €2,200 mn, equivalent to less than three years of the expected annual gross savings of €770 mn per year from 2023.

Roughly 42% of Bankia's cost base at end of FY 2019.


Based on the market consensus, ROTE of the merged entity could rise to 8.2% within two years and EPS could improve 28%.

Vs. ROTEs of CaixaBank at 5% and Bankia at 1.9% at Q3 2020.



This merger will close and the spread shows it.

Gross spread of 1.6% on 7 December.
I recommend keeping an eye on the spread: it often reaches c. 2% gross (c. 8% annualised) during intraday trading.
Recommendation is Long 1 Bankia / short 0.6845 CaixaBank.


CaixaBank - Bankia: Merger Approval at the EGMs, Spread