cincodias.elpais.com
BBVA's Takeover of Sabadell: Unexpected Accounting Cost
BBVA's offer to acquire Banco Sabadell, opening on Monday, now faces a 477 million euro positive goodwill, a shift from initial projections of negative goodwill, impacting future results despite no cash outflow.
- How has the valuation of the deal changed over time, and what factors contributed to this change?
- The projected goodwill has changed drastically. Initial estimates showed a 2.134 billion euro gain. This decreased to 1.023 billion in September, 672 million in October, and then increased to the current 477 million in February, primarily due to fluctuating stock prices of both BBVA and Sabadell. The rising stock prices increased the implied price of the acquisition, converting badwill into goodwill.
- What is the significant accounting change in BBVA's acquisition of Sabadell, and what are its immediate implications?
- BBVA's takeover of Sabadell initially projected a 2.134 billion euro negative goodwill (badwill). However, due to rising stock prices, this has shifted to a 477 million euro positive goodwill (goodwill) if 100% of Sabadell is acquired. This means BBVA will not achieve the expected accounting profit, though no immediate cash outflow is involved.
- What are the potential long-term consequences of this positive goodwill for BBVA, and what is the current market perception of the offer?
- The 477 million euro positive goodwill could lead to future impairments if the acquisition price isn't justified, negatively affecting BBVA's results. Currently, there's an 8.7% negative premium, meaning investors would lose money by accepting BBVA's offer compared to selling their Sabadell shares on the market. For instance, an investor with 10,000 euros in Sabadell shares would lose 870 euros by accepting the offer.
Cognitive Concepts
Framing Bias
The article presents a neutral account of the BBVA's takeover bid for Sabadell, detailing both the potential benefits and drawbacks for BBVA. The focus is on the financial implications, specifically the shift from expected negative goodwill to positive goodwill, and the impact on BBVA's accounting. While the article highlights the negative premium for Sabadell shareholders, it also notes the increased value offered compared to the initial bid. The narrative structure is chronological, outlining the evolution of the deal's financial projections.
Bias by Omission
The article focuses primarily on the financial aspects of the deal. It could benefit from including additional perspectives, such as those of Sabadell shareholders or independent financial analysts. The potential long-term strategic implications for both banks are not extensively explored. This omission might not be biased, but rather due to space constraints or scope.
Sustainable Development Goals
The merger between BBVA and Sabadell impacts economic growth and employment within the financial sector. The deal involves significant financial transactions and valuations, directly affecting the financial health and stability of the involved institutions and potentially influencing the broader economy. While the article highlights a shift in projected goodwill, implying no immediate cash outflow, the long-term effects on jobs, investment, and market stability within the banking sector are relevant to SDG 8.