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BBV plans $14B bank raid
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October 19, 1999: 7:41 a.m. ET
Spanish banking consolidates with anticipated purchase of Argentaria
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LONDON (CNNfn) - Spain's Banco Bilbao Vizcaya (BBV) is expected to announce the $14 billion acquisition of smaller domestic rival Argentaria later Tuesday, creating the country's second-largest bank with assets of $245 billion.
Analysts said the long-anticipated deal would create a rival to the country's largest bank, BSCH, and provide the leverage for expansion into France, Italy and Portugal.
The deal, structured as a stock-swap merger, is the latest example of the consolidation in the region's financial sector spreading to southern Europe, with increasing ties among Italian banks and attempts by the key Spanish companies to break into the Portuguese market.
BBV is expected to offer three of its own shares for every five Argentaria shares, valuing its bid at close to $14 billion at Monday's closing market prices. BBV closed at 12.81 euros while Argentaria finished at 21.69 euros.
"It is a bit disappointing that there is no premium," said José Luis de Mora, analysts at Merrill Lynch.
However, Argentaria is expected to receive a greater share of management control than its 35 percent share of the enlarged bank's market capitalization.
The Spanish government, which retains a golden share in Argentaria following its privatization last year, is seen as keen to reduce the influence of BBV's Basque founding families in the new bank.
BBV's chief executive Pedro Luis Uriarte is expected to take the role of the merged entity which is expected to have joint chairmen.
BSCH was formed in January from the merger of Banco Santander and Banco Central Hispanoamericano, and has total assets of $274 billion.
"This deal is as good as the Banco Santander merger," said De Mora, noting the strength of their combined industrial holdings -- including 8 percent of telecom giant Telefonica and 2 percent of energy giant Endesa.
Shares in BBV and Argentaria were suspended by the Madrid bourse before the open Tuesday. The banks have approached the Bank of Spain for approval.
BBV announced earlier this week that it was in talks with Italy's Unicredito to form a joint venture likely to focus on their investment banking activities.
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