BBVA places $2.6 billion bid to gain ownership of Garanti

ISTANBUL

The Spanish bank that owns a 49.85 percent share in Garanti BBVA launched a voluntary takeover bid yesterday for the rest of the stakes in the Turkish lender at a price of 12.20 Turkish Liras ($1.22) per share.

Banco Bilbao Vizcaya Argentaria (BBVA) noted the price represents a premium of 34 percent over the volume-weighted average price of the past six months, a sum that it said was very attractive to shareholders.

That represents a premium of about 15 percent over Garanti’s closing price on Nov. 12.Carlos Torres Vila, BBVA’s chairman, said the transaction was a great chance to invest in BBVA’s franchise in Turkey and create value for the bank’s shareholders.“Assuming that all Garanti BBVA shareholders accept the offer, and considering the profit estimated by analysts for the group and the Turkish franchise, the transaction would increase profit per share by 13.7 percent in 2022, and the tangible book value per share by 2.3 percent as of September 2021,” the bank said.

Underlining that Turkey is a strategic market, it added: “While it faces some volatility in the short term, the country’s economic growth potential, its population pyramid, its commercial ties with Europe and the low banking penetration, they all make it an attractive market in the long term.”It said Garanti BBVA is the main private bank in Turkey and the largest by market capitalization.The Spanish bank made its first investment in Garanti in 2011 by buying 25.01 percent of shares. It expanded its stake in the lender in 2015 and again in 2017, reaching 49.85 percent.Turkey is currently the third-largest market for BBVA in terms of profit contribution and executives, including Turkish national CEO Onur Genç, have repeatedly defended their focus on the emerging market. 

“BBVA is probably is trying to take advantage of the weakness in the lira,” said Can Oksun, a trader at Istanbul-based Global Securities. Garanti shares jumped 10 percent, while Borsa Istanbul’s BIST 100 index opened the week at a record high of 1,672.35 points, up more than 2 percent. BBVA shares fell 5 percent in Madrid trading.“Garanti is one of the most profitable lenders in Turkey, supported by a superior margin and asset-quality management,” said Bloomberg Intelligence analyst Tomasz Noetzel.BBVA sold its U.S. unit for $11.8 billion last year. Its shares have risen 52 percent this year, beating the Stoxx 600 Banks Index, which is 37 percent higher.The bank estimates the closing of the transaction will take place during the first quarter of 2022.

The offer should get approvals from the Capital Markets Board (SPK) and the Banking Regulation and Supervision Agency (BDDK).Last week, Italian lender UniCredit announced that it decided to sell its remaining 20 percent stake in the Turkish lender Yapı Kredi. Koç Holding will buy shares in Yapı Kredi corresponding to 18 percent for 300 million euros, while the remaining 2 percent is expected to be sold on the market, UniCredit said in a statement on Nov. 8.