The lira’s 40% drop since November means the new price is still 11% cheaper in euros
BBVA is going to scratch its pocket to get what it wants in Turkey. But a higher offer for Garanti still makes financial sense. Yesterday it raised its offer for half of the Turkish entity that it does not yet own by 23%, up to 15 lira per share. Shares of the country’s banks have soared since BBVA made the original offer in November; its local rivals Yapi Kredi and Isbank are up almost 60%. That makes Garanti’s roughly 15% premium over Garanti’s unaltered price look stingy.
Investors think that is enough: Garanti was trading a little below the increased price yesterday. And the lira’s 40% drop since mid-November means the new price is still 11% cheaper in euro terms. BBVA pays 0.65 times Garanti’s estimated tangible book value for 2022, up from 0.53 times previously. But the real prize is ending an inefficient status quo. Paying more should please everyone.
