Bbva Ord Regulatory News (BVA)

16 Feb 2007 09:58

Banco Bilbao Vizcaya Argentaria SA16 February 2007 Banco Bilbao Vizcaya Argentaria, S.A. (BBVA), pursuant to the provisions ofarticle 82 of the Spanish Securities Market Act, proceeds by means of thepresent document to notify the following: RELEVANT EVENT BBVA has reached today an agreement for the acquisition of Compass Bancshares,Inc. ("Compass"), a USA banking group, quoted on Nasdaq, and active in Alabama,Texas, Florida, Arizona, Colorado and New Mexico, for a total approximateamount of US$9,600 million. BBVA will pay part of the consideration to Compassshareholders in cash and part in 196,000,000 newly issued BBVA shares or ADSs.The agreement provides that the shareholders of Compass may choose betweenconsideration in cash or in BBVA shares, subject to proration if either electionis oversubscribed, as both amounts are predetermined. The acquisition will be accomplished through mergers and a Binding ShareExchange, and its effect shall be conditioned, according to applicable law, onthe approval of the transaction at a shareholders' meeting of Compass by anaffirmative vote of the majority of the outstanding share capital and, as isusual in this type of transaction, to prior receipt of regulatory approvals. BBVA's board, once such administrative approvals have been obtained, willpropose to its shareholders' meeting a capital increase for a maximum amount of196,000,000 shares, where pre-emptive rights will be excluded. This approvalwill be necessary for the implementation of the transaction. BBVA shall finance the cash consideration in this transaction with internalresources, among which the funds raised through the sale of its 5.01% stake inIberdrola. This sale is accomplished through the closing and settlement ofhedging positions, "equity swaps" previously agreed, representing gross capitalgains of €844,4 million. With the latter divestment BBVA will cease to hold astake in Iberdrola. Today, at 11.00 (Madrid time) the transactions shall be presented to analystsand investors. There will be a live webcast of the presentation which may beaccessed from BBVA's corporate site (www.bbva.com) and which will be availablefor replay at BBVA's corporate web site during at least the following month. A press release related to the transaction, which will be disclosed to themedia, is attached. BBVA agrees to acquire 100% of Compass Bancshares for approximately $ 9.600 million and takes a decisive step in its growth strategy in the U.S. The transaction will places BBVA among the top 20 banks in the US, becoming a regional leader in the markets of Texas, Alabama, Arizona and New Mexico and also with a significant presence in Florida and Colorado The new BBVA US franchise will reach US$ 47.000 million in assets, US$ 32.000million in loans, US$ 33.000 million in deposits and 622 branches in a total of 7 states after the transaction The transaction is the largest acquisition announced in BBVA's history andpresents an excellent strategic fit with BBVA's recent acquisitions in the USfrom 2004 to 2006 of Valley Bank, Laredo National Bancshares, Texas RegionalBancshares and State National Bancshares BBVA will offer Compass shareholders the right, subject to proration, to electto receive 2.8 BBVA shares or ADS or $71.82 in cash for each Compass share,representing a 16.1% premium over the last ten trading days average BBVA will finance the acquisition through a capital increase of 196 millionshares of BBVA, internal resources coming from the sale of selected stakes andinternal capital generation The transaction allows BBVA to advance its strategy to move towards a moreglobal group and after the transaction the US will contribute approximately 10%of group's earnings Compass, with total assets of US$ 34.200 million, a network of 417 branches anda net profit of US$ 460 million, will notably increase the growth capacity ofBBVA US in retail and SMEs banking and in other business, such as insurance andcredit cards BBVA has announced today a definitive agreement to acquire 100% of the shares ofCompass Bancshares Inc. for a value of approximately US$ 9.600 million, taking adecisive step in its growing strategy in the US. BBVA will offer Compassshareholders the right, subject to proration, to elect to receive 2.8 BBVAAmerican Depositary Shares or US$71.82 in cash for each Compass share,representing a 16.1% premium over the last ten trading days average. With thistransaction BBVA US will place BBVA among the top 20 banks in the US with afranchise of 622 branches, US$ 47.000 million in assets, the regional leadershipin the markets of Texas, Alabama, Arizona and New Mexico and a significantpresence in Florida and Colorado. The US franchise, after the transaction, willcontribute approximately to 10% of the group's earnings, showing an importantadvance in BBVA's strategy to move towards a more global financial group The transaction, subject to regulatory and shareholder approvals, has beenapproved by the by the Board of Directors of BBVA and Compass. The transactionis expected to create value for BBVA shareholders and to provide an excellentfit with BBVA's growth profitable strategy. At the same time, the transactionis attractive for Compass shareholders and permits the integration of Compassinto one of the more profitable and efficient global franchises. With this transaction BBVA strengthens its presence in the southern US, one ofthe most attractive financial markets in the country, where BBVA has beenpresent through its acquisitions of Laredo National Bancshares in 2005 and StateNational Bancshares and Texas Regional Bancshares in 2006. It also highlightsthe excellent strategic fit with BBVA's franchise in the US. For BBVA, Compass represents a platform with an excellent positioning in the "Sunbelt" area from California to Florida, which is considered an attractiveregion in the US due to its high growth rates, and is an attractive geographicalfit with the areas of interest for BBVA, complementing prior areas coveredperfectly. Established in 1970, and based in Birmingham (Alabama), Compass has a presencein the retail, wholesale and private banking segments with 417 branchesdistributed between Texas (165), Alabama (90), Arizona (74), Florida (44),Colorado (33) and New Mexico (11). Additionally, Compass has a relevant creditcard business, ranked among the 35 main US credit cards issuers. Financially, Compass has runnered up for its high growth volumes and has a goodmix of profitability, credit quality and efficiency combined with an outstandingbrand awareness. BBVA's management team is a respected management team by themarket, investors and the press community. Since its establishment, Compass has been awarded by Forbes as one of the bestmanaged companies in the US, obtaining the "Mergent Achiever Award" for itsconsistent dividend growth and the "Greenwich Research" for its customersatisfaction levels. The entity has traded in NASDAQ since 1984. Compass shareholders that receive BBVA shares in the transaction will be able toparticipate in BBVA's franchise, one of the most profitable financialinstitutions in Europe, with top franchises in Spain, Latin America and US, andwith a solid track record in shareholder's value creation. Improvement of BBVA's positioning With the acquisition of Compass, in less than 4 years BBVA will become thelargest financial institution in the "Sunbelt" region, after its acquisitions ofValley Bank, Laredo National Bancshares, State National Bancshares and TexasRegional Bancshares, with $47 billion in assets and 622 branches in a marketwith a total population of 101 million. Geographically, the new BBVA US will be a regional leader (excluding nationalplayers) in the key metropolitan areas of Texas, situated within the top 3ranking in the state of Alabama, top 5 in Arizona and top 8 in New Mexico, witha remarkable presence in Florida and Colorado. Furthermore, the acquisition fits well with BBVA's policy of high growth and lowrisk acquisitions. BBVA was represented in the transaction by Morgan Stanley & Co. Inc. and ClearyGottlieb Steen & Hamilton LLP, respectively, as financial and legal advisors. A strategic transaction that creates value The acquisition of Compass Bancshares is a great fit with BBVA's goal ofnon-organic growth transactions, both strategically and financially. On one hand, the acquisition of Compass fits well with BBVA's defined strategyof moving forward to a more global and international structure for BBVA. Thistransaction is a significant change for BBVA's structure in the US as it willcreate a geographical diversification of earnings at the group level generatinga significant increase of BBVA USA franchise weight in the BBVA Group's businessand profits. After the acquisition, the US business will contributeapproximately 10% of the group's earnings and 10% of the Group's assets. BBVA will finance this transaction through a capital increase of approximately52% of the aggregate value of the acquisition (approximately US$ 9,600 million)and internal resources coming from a well-balanced sale of selected stakes inits industrial portfolio - in which Iberdrola is included- , combined with theinternal capital generation. Taking into account the capital increase, the sale of stakes from its industrialportfolio and the internal capital generation, the resulting core capital forBBVA Group as of December 2007 is expected to be 5.50%. BBVA is a financial group with more than US$ 520 Bn in total assets, 35 millionclients, 7.500 branches and approximately 100.000 employees in 35 countries. TheBBVA Group maintains a leadership positioning in Spain, Mexico and Latin Americaand has started a growth and diversification strategy in the USA and Asia.Compass acquisition fits in its goal of becoming a global Group with a strongpresence in high growth markets. Forward-Looking Statements Information set forth in this release contains forward-looking statements, whichinvolve a number of risks and uncertainties. BBVA cautions readers that anyforward-looking information is not a guarantee of future performance and thatactual results could differ materially from those contained in theforward-looking information. Such forward-looking statements include, but arenot limited to, statements about the benefits of the business combinationtransaction involving BBVA and Compass, including future financial and operatingresults, the new company's plans, objectives, expectations and intentions andother statements that are not historical facts. The following factors, among others, could cause actual results to differ fromthose set forth in the forward-looking statements: the ability to obtainregulatory approvals of the transaction on the proposed terms and schedule; thefailure of BBVA or Compass shareholders to approve capital increase or thetransaction, respectively; the risk that the businesses will not be integratedsuccessfully; the risk that the cost savings and any other synergies from thetransaction may not be fully realized or may take longer to realize thanexpected; disruption from the transaction making it more difficult to maintainrelationships with customers, employees or suppliers; competition and its effecton pricing, spending, third-party relationships and revenues. Additional factorsthat may affect future results are contained in BBVA's and Compass' filings withthe SEC, which are available at the SEC's web site http://www.sec.gov. BBVAdisclaims any obligation to update and revise statements contained in thesematerials based on new information or otherwise. Additional Information About this Transaction In connection with the proposed transaction, BBVA will file with the Securitiesand Exchange Commission (the "SEC") a Registration Statement on Form F-4 thatwill include a proxy statement of Compass that also constitutes a prospectus ofBBVA. Compass will mail the proxy statement/prospectus to its stockholders.Investors and security holders are urged to read the proxy statement/prospectusregarding the proposed transaction when it becomes available because it willcontain important information. You may obtain a free copy of the proxy statement/prospectus (when available) and other related documents filed by BBVA andCompass with the SEC at the SEC's website at www.sec.gov. The proxy statement/prospectus (when it is available) and the other documents may also be obtainedfor free by Compass's website at www.compassbank.com under the tab "InvestorRelations" and then under the heading "SEC Filings". This release does not constitute an offer of securities for sale. Participants in this Transaction BBVA, Compass and their respective directors, executive officers and certainother members of management and employees may be soliciting proxies fromstockholders in favor of the transaction. Information regarding the persons whomay, under the rules of the SEC, be considered participants in the solicitationof the stockholders in connection with the proposed transaction will be setforth in the proxy statement/prospectus when it is filed with the SEC. You canfind information about BBVA's executive officers and directors in BBVA's Form20-F filed with the SEC on July 7, 2006. You can find information about Compass'executive officers and directors in their definitive proxy statement filed withthe SEC on March 17, 2006. You can obtain free copies of these documents fromthe BBVA and Compass using the contact information above. This information is provided by RNS The company news service from the London Stock Exchange