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: Definitive Agreement and Exchange Ratio

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Bankia - CaixaBank: Merger in Progress, Spread Attractive

CaixaBank-Bankia Merger Conversations Announcement: First Take

Event-Driven

The markets have enthusiastically greeted the merger conversations between <a href="https://www.smartkarma.com/entities/caixabank-sa" target="_blank" data-smartkarma-citation="entities:21255:1" rel="noopener">CaixaBank SA (CABK SM)</a> and <a href="https://www.smartkarma.com/entities/bankia-sa" target="_blank" data-smartkarma-citation="entities:21252:1" rel="noopener">Bankia SA (BKIA SM)</a> . This operation is in fact, a takeover of Bankia by CaixaBank.
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<li>This merger seems wise from both strategic and cost-savings perspectives. On the day of announcement, Bankia share price increased by 32.9% while that of CaixaBank increased 12.4%.</li>
</ul>
This follow-up note contains some background information about the former Spanish savings banks.
Foundation La Caixa, the third largest foundation in the world, and is seeking a stake of at least 30% in the merged entity. The current market caps (9 September) imply a conversion ratio of 0.68 CaixaBank shares per each Bankia share. CaixaBank should press for a lower exchange ratio: for a 30% stake of the Foundation, the exchange ratio would be 0.646 (at 9 September closing prices). The FROB would own 15.37% using this ratio.
The parties are currently negotiating this ratio and the takeover premium for Bankia's shareholders.
Regarding approvals, the CNMC (the Spanish competition watchdog) will be notified. There may be some issues regarding branch networks in some regions and pension plans market share, but with some minor remedies, the merger should pass muster. The merger has already the blessings of the Ministry of Finance, the ECB and the Bank of Spain.
The merger will generate over EUR 8 bn of badwill (which will partly compensate for the cost of synergies). A quick calculation of synergies would take 45% of LTM Bankia non-interest expense, EUR 1,701 mn, to yield EUR 536 mn of net synergies by 2023e.
The interloper risk would mean a competing offer for Bankia. I consider this low risk.

The markets have enthusiastically greeted the merger conversations between CaixaBank SA (CABK SM) and Bankia SA (BKIA SM) . This operation is in fact, a takeover of Bankia by CaixaBank.

This merger seems wise from both strategic and cost-savings perspectives. On the day of announcement, Bankia share price increased by 32.9% while that of CaixaBank increased 12.4%.

This follow-up note contains some background information about the former Spanish savings banks.
Foundation La Caixa, the third largest foundation in the world, and is seeking a stake of at least 30% in the merged entity. The current market caps (9 September) imply a conversion ratio of 0.68 CaixaBank shares per each Bankia share. CaixaBank should press for a lower exchange ratio: for a 30% stake of the Foundation, the exchange ratio would be 0.646 (at 9 September closing prices). The FROB would own 15.37% using this ratio.
The parties are currently negotiating this ratio and the takeover premium for Bankia's shareholders.
Regarding approvals, the CNMC (the Spanish competition watchdog) will be notified. There may be some issues regarding branch networks in some regions and pension plans market share, but with some minor remedies, the merger should pass muster. The merger has already the blessings of the Ministry of Finance, the ECB and the Bank of Spain.
The merger will generate over EUR 8 bn of badwill (which will partly compensate for the cost of synergies). A quick calculation of synergies would take 45% of LTM Bankia non-interest expense, EUR 1,701 mn, to yield EUR 536 mn of net synergies by 2023e.
The interloper risk would mean a competing offer for Bankia. I consider this low risk.

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