BBVA, Spain's second-largest bank, yesterday stepped up its push into the US by unveiling an agreed $9.6 billion (€7.3 billion) acquisition of Compass Bancshares, a franchise covering six states.
News of the deal drew a cool reception from investors, who drove the shares down 5 per cent in early trade. However, by the close on the Madrid stock exchange they had recovered ground, down 2.7 per cent at €19.49.
Analysts voiced concerns about the dilutive impact of the capital increase, which comes just three months after a €3 billion share issue aimed at improving the balance sheet. There were also worries about the erosion of BBVA's core capital ratios.
"History shows investors should be wary of acquisitive companies," UBS said in a note.
However, Standard & Poor's affirmed the bank's credit ratings, highlighting BBVA's "healthy asset quality, conservative risk management and a benign economic environment in most markets".
Shareholders in the US retail bank, which is present in Alabama, New Mexico, Arizona, Florida, Colorado and Texas, will be offered 2.8 American Depositary Shares of BBVA per Compass share, or $71.82 (€54.66) in cash.
BBVA said the offer represented a 16 per cent premium over the average trading price over the past 10 days. It will finance the deal through a €4 billion capital increase, supplemented with the proceeds of planned asset sales.
