Banco Bilbao Vizcaya Argentaria SA raised the price it’s offering to shareholders of its Turkish unit following calls from some investors that the previous bid was too low.
The Spanish lender said it will pay 15 liras ($1.02) per share for the 50.15% it doesn’t own in Turkiye Garanti Bankasi AS, according to a regulatory filing on Monday. In November, when it launched the takeover bid, it had offered 12.20 liras.
“This is good news for Turkish banks and the broader market,” said Can Oksun, a senior trader at Global Securities in Istanbul.
BBVA will still shell out less in dollar terms after the lira weakened by almost a third against the euro since the deal was announced in November. The maximum the Spanish lender will pay will be about 31.56bn liras, or $2.14bn at current exchange rates, assuming all Garanti BBVA’s shareholders sell their shares. That’s lower than the $2.56bn it was expecting to pay in November.
Garanti shares jumped 5.6% in Istanbul, while BBVA declined 2%, in line with the Stoxx 600 Banks Index.
Bloomberg News reported earlier this month that some Turkish money managers wanted a higher price for their shares in Garanti, complaining that BBVA’s buyout offer undervalued the bank and failed to take account of the lira’s slide.
“BBVA appears to be a penny pincher and it doesn’t seem like they’re sincerely willing to buy out the shares,” said Semih Kara, Tacirler Asset Management’s chief investment officer. “We are not planning to sell our shares as the price is still below the level adjusted for the lira-euro move when the deal was announced in November.”
BBVA’s new offer for the remaining 50.15% stake in Garanti it doesn’t own at 15 liras a share (a 6% premium to the last price on April 22) is no surprise to us – given the Turkish bank’s stock is trading at more than 20% above November’s initial bid – and we anticipate further support for domestic peers, which have rallied 30%-plus on average in 2022. Garanti’s near-record-peak ROE of 40% in 1Q typifies sectors strength in a volatile and increasingly challenging environment, with inflation in Turkey above 60% and deteriorating GDP prospects, according to Tomasz Noetzel, Bloomberg Intelligence banking analyst.
BBVA estimates a maximum negative impact from the deal of about 34 basis points on its CET1 fully-loaded ratio, it said.
The Spanish bank is paying for the offer with existing funds raised from last year’s sale of its retail unit in the US. The lender had said it would deploy some of those proceeds for its Turkish bet and to buy back shares.
Garanti said on Monday that first-quarter net income tripled to 8.2bn liras on the back of higher net interest income and fees and commissions revenue.