The boards of directors of Spanish banks CaixaBank and Bankia have approved plans for a €17 billion merger.
The new entity, which will operate under the CaixaBank brand, will be established with the aim of “adding value to customers, improving profitability for shareholders and continuing to support Spain's economic recovery”, according to a statement.
Once the due diligence process has been completed by both entities, the next step involves both boards’ approval of the merger reports, as well as the calls for the General Shareholders' Meetings, which are scheduled to take place in November.
The operation is expected to close during the first quarter of 2021, once all the relevant regulatory authorisations are received from the Ministry of Economic Affairs and Digital Transformation, the National Commission of Markets and Competition, as well as non-opposition confirmed from the Directorate-General for Insurance and Pension Funds, the Spanish Securities and Stock Exchange Commission (CNMV) and the Bank of Spain for CaixaBank’s acquisition of significant holdings in a company subject to their supervision.
The boards of directors of both banks have approved the exchange ratio of 0.6845 new CaixaBank ordinary shares for every Bankia share. The agreed price includes a premium of 20 per cent over the exchange ratio at the closing of 3rd September, before the market was notified of the negotiations concerning the deal. In addition, it represents a premium of 28 per cent over the average exchange ratio of the last three months.
If the total number of outstanding Bankia shares that could be exchanged is taken into account, the maximum number of CaixaBank shares to issue in order to meet the merger exchange amounts to 2,079,209,002 CaixaBank ordinary shares, each with a nominal value of one euro, a figure that could be adjusted based on Bankia's treasury stock.
The established exchange assumes that CaixaBank shareholders will initially represent 74.2 per cent of the capital of the new entity, and those of Bankia will make up 25.8 per cent. CriteriaCaixa, an entity 100 per cent controlled by the "la Caixa" Banking Foundation, will remain as CaixaBank's reference shareholder with around 30 per cent of the shareholding, while the FROB (Fund for Orderly Bank Restructuring) will hold 16.1 per cent.
The remaining shareholding structure of the combined entity consists of 54 per cent free float (shares listed on the stock market), 37 per cent of which belongs to institutional investors and 17 per cent to the retail market.
Morgan Stanley and Rothschild, CaixaBank's and Bankia's respective financial advisers, have issued their fairness opinion in which they concluded that the “proposed exchange rate is reasonable from a financial point of view and in current market conditions”, the statement said.
CaixaBank is being advised by Uría Menéndez and Deloitte, while Bankia is being advised by Garrigues and EY.
The combined entity resulting from the merger will be chaired by José Ignacio Goirigolzarri, Bankia's current chairman, once he is appointed by the new CaixaBank board of directors. The chairman, who will be an executive director, will be responsible for the areas of secretary of the board, external communication, institutional relations and internal auditing (notwithstanding that this area shall remain accountable to the audit and control committee).
The current CEO of CaixaBank, Gonzalo Gortázar, will continue as chief executive of the resulting entity reporting directly to the board of directors.
Goirigolzarri said: “With this operation, we will become the leading Spanish bank at a time when it is more necessary than ever to create entities with a significant size, thus contributing to supporting the needs of families and companies, and to reinforcing the strength of the financial system. The new entity will continue to carry out the best corporate governance practices.”
Meanwhile, Gortázar commented: “The merger will allow us to face the challenges of the next 10 years with greater scale, financial strength and profitability, which will result in greater value for our shareholders, more opportunities for our employees, better service to our clients and a greater capacity to support Spain’s economic recovery”.
The proposed composition of the new Board of Directors, comprising 15 members, is as follows:
- Tomás Muniesa Arantegui, currently a proprietary director of CaixaBank, appointed at the proposal of CriteriaCaixa.
- José Serna Masiá, currently a proprietary director of CaixaBank, appointed at the proposal of CriteriaCaixa.
- Gonzalo Gortázar Rotaeche, currently executive director and CEO of CaixaBank.
- María Verónica Fisas Vergés, currently an independent director of CaixaBank.
- Cristina Garmendia Mendizábal, currently an independent director of CaixaBank.
- María Amparo Moraleda Martínez, currently an independent director of CaixaBank.
- Eduardo Javier Sanchiz Irazu, currently an independent director of CaixaBank.
- John Shepard Reed, currently an independent director of CaixaBank.
- Koro Usarraga Unsain, currently an independent director of CaixaBank.
- José Ignacio Goirigolzarri Tellaeche, currently executive director and chairman of the Board of Directors of Bankia.
- Joaquín Ayuso García, currently an independent director of Bankia.
- Francisco Javier Campo García, currently an independent director of Bankia.
- Eva Castillo Sanz, currently an independent director of Bankia.
- A director proposed by BFA Tenedora de Acciones, S.A., who will join as a proprietary director.
- Fernando María Costa Duarte Ulrich, who will join as ‘another external director’. He is currently the non-executive president of BPI.