(Bloomberg) -- BBVA adjusted its takeover offer for Banco Sabadell SA, including a new cash component, to compensate dividend payments at both lenders.
Spain’s second-largest bank now proposes one newly issued share for every 5.0196 Sabadell shares, plus €0.29 ($0.32) in cash. The cash amount is equivalent to an interim dividend BBVA intends to pay out. The lender previously offered one of its shares for every 4.83 in Sabadell.
The changes “are intended to maintain the economic terms of the offer equivalent, following the dividend payments” disclosed by both lenders, BBVA said in a statement late on Tuesday. They are “in accordance with the prior announcement of the offer.”
BBVA, whose official name is Banco Bilbao Vizcaya Argentaria SA, made a takeover bid for rival Sabadell in early May. Sabadell’s management has rejected the offer as too low, while BBVA has ruled out improving it. Both banks have since stepped up payouts as they seek to win over investors for their respective strategies.
“Sabadell shares now trade at a c.4% discount to BBVA’s offer, which implies the probability of a deal going through currently stands at around 91%,” analysts including Borja Ramirez at Citigroup Inc. wrote in a note.
Sabadell announced in July it will pay out €2.9 billion to shareholders over this year and next, up from $2.4 billion promised earlier. It delivered an interim dividend of €0.08 per share on Tuesday.
BBVA has said it will pay an interim dividend of €0.29 per share on Oct. 10, which would be its highest such payment ever.
(Updates with analyst comment in fifth paragraph.)
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