February 22, 2019 / 12:37 PM / 10 months ago

Spain's Abanca approaches shareholders of Liberbank about takeover

MADRID, Feb 22 (Reuters) - Spanish regional lender Abanca on Friday confirmed it had approached Liberbank’s main shareholders regarding a potential takeover, which could value the former savings bank at around 1.7 billion euros, although it said no deal had been reached yet.

Liberbank previously said it had not received any concrete offer from Abanca and that it was not in talks over any strategic options apart from a proposed merger it was working on with Unicaja.

A merger between Abanca and Liberbank would create Spain’s sixth-biggest bank with around 90 billion euros ($102 billion) in assets.

As with other European banks, financial margins at Spanish lenders are under pressure due to ultra low interest rates, leaving banks trying to offset low profitability through consolidation.

Since the outbreak of the financial crisis in 2008, the number of Spanish lenders has shrunk to 12 from over 55.

Abanca said the potential offer could be in cash or shares and that an indicative price of 0.56 euros per share had been mentioned during preliminary talks with Liberbank’s main shareholders.

The indicative price, equivalent to a premium of more than 40 percent compared to yesterday’s closing price, would value Liberbank at around 1.7 billion euros ($1.93 billion), according to Reuters calculations.

Shares at Liberbank rose as much as 22 percent on Friday and were up 19 percent at 0.466 euros at 1145 GMT.

News about the potential merger between Abanca and Liberbank was first published by newspaper Expansion.

“Positive news for Liberbank, not only because any hint of a counter offer will boost the price but also because it strengthens its negotiating position in the face of negotiations with Unicaja,” Banco Sabadell said in a note.

Liberbank’s own banking foundation is among its key shareholders, with a stake of around 23 percent. Foundations support the local community and fund development projects.

Merrill Lynch is advising Abanca on the potential merger with Liberbank.

Separately, Deutsche Bank is working with Liberbank on the deal with Unicaja, which is being advised by Mediobanca.

$1 = 0.8817 euros Reporting By Jesús Aguado; Editing by Kirsten Donovan

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