Turkey’s securities supervisor (Capital Markets Board) has authorised BBVA’s takeover bid for the 50.15% it does not own in Turkish subsidiary Garanti, the bank has informed the National Securities Market Commission (CNMV). The offer will begin on 4 April and end on 29 April.
BBVA, which owns 49.85% of Garanti’s capital, announced the takeover bid in November last year. It made the offer at 12.20 Turkish liras per share, with a 15% premium on its share price at the time, making its success conditional on achieving more than 50% of the capital. Therefore, it only needs shareholders owning 0.25% of the bank to participate in the bid to declare it successful. The threshold is relevant because, once it is exceeded, the group will be able to continue acquiring shares at any time it deems appropriate without the need to launch a new takeover bid.
When the bank launched the bid, it estimated that the operation would cost it a maximum of 2.249 billion euros if all shareholders sold their shares, using the then exchange rate of 11.43 Turkish liras per euro as the basis for its calculation. The nearly 30% fall in the Turkish currency has drastically reduced the cost of the transaction in euros and, if it were carried out, BBVA would currently save more than 670 million euros and pay only 1.578,91 billion euros.
The transaction was received with falls in BBVA’s share price due to increased exposure to a market with uncertainties such as the Turkish one. However, BBVA’s chairman has defended the transaction as one “of enormous value” for the bank’s shareholders because it increases its weighting in a market with high growth expectations.
But there is a risk that BBVA will have to apply the special accounting established by international regulations for situations of “hyperinflation” (when a country’s inflation exceeds 100% in three years). According to UBS’s estimates, this could take 900 million euros off the bank’s net profit.