MADRID (Sept 18): Spain's Caixabank is valuing state-owned Bankia at €4.3 billion as part of an all-in share deal that will create Spain's biggest domestic bank with more than €664 billion in total assets.
The banks said in a joint statement today that they expected annual cost synergies of around €770 million that will be fully achieved by 2023 and new annual revenues of around €290 million over a period of five years.
Lenders will have a combined valuation of more than €16 billion, they said.
Banks across Europe are struggling to cope with record-low interest rates and the economic downturn sparked by the Covid-19 pandemic, leading analysts to predict more tie-ups to cut costs.
The deal has been described as a merger, but it is in effect a takeover by Caixabank as it is almost three times as big as Bankia in terms of market value and almost two times by assets.
The agreement consists of an exchange ratio of 0.6845 new Caixabank ordinary share for every Bankia share and includes a 20% premium over the exchange ratio at the closing of Sept 3, before news first emerged of the deal, the lenders said.
In addition, it represents a premium of 28% over the average exchange ratio of the last three months.
The valuation of Bankia is slightly below the €4.4 billion at yesterday's closing price.
Since news of the merger first emerged, shares in Bankia have risen around 39%, while Caixabank has gained 14%.
Under the terms of the deal, Caixabank shareholders will initially represent 74.2% of the capital of the new entity, and Bankia will hold 25.8%.
Criteria, completely controlled by the foundation of La Caixa, will remain as Caixabank's main shareholder with around 30% of the combined bank, while the Spanish state will hold through the bailout fund FROB 16.1%.