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.

Event-Driven

Media (Bolsamanía, Bloomberg) reported during the weekend that "Spain’s Unicaja is Said to Move Closer to Liberbank Takeover".As a result:
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<a href="https://www.smartkarma.com/entities/unicaja-banco-sa" target="_blank" data-smartkarma-citation="entities:28379:1" rel="noopener">Unicaja Banco SA (UNI SM)</a> has confirmed to the National Securities Market Commission (CNMV, the Spanish market watchdog) "preliminary contacts with Liberbank, with the knowledge of the Board of Directors without, for the moment, the participation of external advisers and without having made a decision in this regard."</li>
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<a href="https://www.smartkarma.com/entities/liberbank-sa" target="_blank" data-smartkarma-citation="entities:21279:1" rel="noopener">Liberbank SA (LBK SM)</a> has confirmed "preliminary contacts with Unicaja Banco, without, so far, having adopted any decision in this regard."</li>
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During Monday's trading session, Unicaja's shares gained 10% whilst Liberbank's gained 16%. Over the last two sessions, investors have booked some profits and the shares of Unicaja have dropped by 8% and those of Liberbank by 4%.
Last year, both banks held conversations regarding a merger, but the conversations stopped mainly about discrepancies on the exchange ratio and the top management positions.
Both banks are well capitalised, but their P/BV is around 0.3x. The merger of both entities would have proforma assets of EUR 108.8 bn, potentially the fifth largest group in Spain, which would allow it to try to acquire Ibercaja Banco (unlisted).
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Recommendation is long Liberbank / short Unicaja, using a 40.4% / 59.6% exchange ratio.
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Risks: the float in Unicaja is currently 28.3%, so there is a short squeeze risk in a position to capture the spread, especially if Abanca enters the fray.
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Read across: <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> seems to be now the Spanish bank with the lowest ROE (even negative), and rumors are that it is being shopped around. A potential operation could be a combination <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> - Sabadell.

Media (Bolsamanía, Bloomberg) reported during the weekend that "Spain’s Unicaja is Said to Move Closer to Liberbank Takeover".As a result:


Unicaja Banco SA (UNI SM) has confirmed to the National Securities Market Commission (CNMV, the Spanish market watchdog) "preliminary contacts with Liberbank, with the knowledge of the Board of Directors without, for the moment, the participation of external advisers and without having made a decision in this regard."

Liberbank SA (LBK SM) has confirmed "preliminary contacts with Unicaja Banco, without, so far, having adopted any decision in this regard."

During Monday's trading session, Unicaja's shares gained 10% whilst Liberbank's gained 16%. Over the last two sessions, investors have booked some profits and the shares of Unicaja have dropped by 8% and those of Liberbank by 4%.
Last year, both banks held conversations regarding a merger, but the conversations stopped mainly about discrepancies on the exchange ratio and the top management positions.
Both banks are well capitalised, but their P/BV is around 0.3x. The merger of both entities would have proforma assets of EUR 108.8 bn, potentially the fifth largest group in Spain, which would allow it to try to acquire Ibercaja Banco (unlisted).

Recommendation is long Liberbank / short Unicaja, using a 40.4% / 59.6% exchange ratio.

Risks: the float in Unicaja is currently 28.3%, so there is a short squeeze risk in a position to capture the spread, especially if Abanca enters the fray.


Read across: Banco De Sabadell Sa (SAB SM) seems to be now the Spanish bank with the lowest ROE (even negative), and rumors are that it is being shopped around. A potential operation could be a combination Banco Bilbao Vizcaya Argentari (BBVA SM) - Sabadell.

Liberbank - Unicaja: Merger Conversations, Exchange Ratio