Bankia: Merger with BMN approved in their Shareholders' Meetings. Buy.
The Extraordinary Shareholders’ Meetings have approved the merger of Bankia and BMN, as was expected. Recall that the exchange ratio is 1 Bankia share per 7.82987 BMN’s shares, which implied valuing BMN at €825mn assuming June, 23rd price of €4.011 (€820mn at today’s price) or a P/VC of 0.47x prior to the €1bn adjustments . The coverage of both NPLs and foreclosed assets was increased to 59% and 40%, respectively, rising the provisions by €0.5bn and € 0.2bn. Cost synergies were estimated at €155mn per year and restructuring costs at €334mn. Bankia estimated that the deal would be earnings enhancing from the first year (+16%) and that the contribution in 2020e may amount to €245mn. CET 1 fully loaded after the deal should reach 12%. We believe that the deal will be completed in 4Q17 or 1Q18.
Bankia is a financial institution based in Spain. Co. is primarily engaged in operations in the banking sector. Co.'s business operations are structured into seven areas: Retail Banking, Business Banking, Private Banking, Asset Management and Bancassurance, Capital Markets and Holdings. Co. offers financial products and services to various customer segments, such as individuals, small and medium enterprises, large corporations, as well as public and private institutions. As of Dec 31 2014, Co. had total assets and total customer deposits of Euro233,648,603,000 and Euro106,806,698,000 respectively.
Bankinter S.A. is a Spanish brokerage firm established in 1989. The company's line of business includes the provision of market research and trading services for Equity and Fixed Income products.
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