$9.6 B Offer for Compass Bancshares

Elena
16 Feb, 2007
New York City

The acquisition is the latest in a string of deals, as well as the biggest BBVA has ever made, and will launch the Spanish bank into the top 20 U.S. operators. The second biggest bank in Spain said it will swap 2.8 of its own shares for each share in Compass Bancshares, or pay $71.82 a share in cash, representing a 16% premium to the average closing price over the last ten days.

[R]8:00 AM Banco Bilbao Vizcaya agreed to buy Compass Bancshares for $9.6 B.[/R]
Banco Bilbao Vizcaya Argentaria ((BBV)) agreed to buy Compass Bancshares ((CBSS)) for $9.6 billion. The second biggest bank in Spain said it will swap 2.8 of its own shares for each share in Compass Bancshares,or pay $71.82 a share in cash, representing a 16% premium to the average closing price over the last ten days. BBVA has been continuously expanding in the U.S. since 2004, with the acquisition of Valley Bank, Laredo National Bancshares, Texas Regional Bancshares and State National Bancshares. The acquisition is the latest in a string of deals, as well as the biggest BBVA has ever made, and will launch the Spanish bank into the top 20 U.S. operators. It will provide BBVA with a another 165 branches in Texas, making it the biggest regional player in the state. The deal took analysts by surprise, as they had been expecting the bank to continue its growth plans after the performance of its recent deals in the U.S has been assessed. Shares in BBVA fell 2.4% in midday Madrid trading. Shares in Compass rose around 7.5% on Thursday on speculation the bank was a bid target.


[R]7:30AM Asian markets declined on Friday with Japan falling on profit-booking.[/R]
Asian market ended mixed on Friday. Tokyo''s Nikkei 225 Index ended 0.1% lower, falling 21.58 points to 17,875.65. Among the advancers in Tokyo, Canon Inc. rose 3.8%. The camera maker announced it plans to spend up to 100 billion yen ($837.98 million) to buy back as many as 17 million shares. Brewery group Sapporo Holdings shares rose 12.6% after U.S. hedge fund Steel Partners announced it planned to spend up to 150 billion yen to raise its stake in the company from 18% to 66.6%. Toyota Motor eased 0.1%, while Honda fell 2.5%. Sony Corp reversed earlier losses to finish up 1.1%.

Hong Kong Hang Seng edged higher 0.14% to 20,567.91. The market was under a little bit of pressure mainly because of weakness in Japan. In the short term, the market is likely to continue to be quite volatile because investors have adopted a relatively short-term trading strategy. Financial markets in Hong Kong will be closed Monday and Tuesday. Around the region, Australia S&P/ASX 200 fell 0.6% to 5,935.5, Singapore Straits Times Index lost 0.5% to 3,236.93, and Thailand SET Index fell 0.8% to 688.

However, South Korean Kospi index gained 0.4%, to 1,448.81, Malaysia KLSE Composite Index added 0.4% and Indonesia Composite Index was up 0.2%. Shanghai Composite Index in China rose 0.2% to a record 2,998.46. The index also had hit an intraday record, at 3,036.35. After the close of trading on Friday, the People''s Bank of China said it raised banks reserve requirement ratio by 0.5%, effective from Feb 21, in an attempt to control better rapid credit growth and surging liquidity.


[R]6:30AM European markets declined on Friday led lower by miners, banks.[/R]
European markets were lower on Friday. In early trade, Frankfurt Xetra Dax fell 0.2% to 6,946.7, the CAC 40 in Paris lost 0.3% to 5,706.71 and London FTSE 100 shed 0.2% to 6,421.5.

Advancers

Gecina, the French property group, gained 7.2% after reporting net profit nearly trebled in 2006 thanks to rising rental revenues and growth in the value of its property portfolio. Michelin, the French tyremaker, surged 5.2% after the previous session restructuring announcement prompted broker upgrades. JPMorgan added Michelin to its focus list and lifted its price target, while Morgan Stanley updated its price target and maintained its overweight rating. Credit Suisse raised its recommendation from underperform to neutral. In corporate news in a relatively quiet session, shares in catering firm Compass Group gained 2.4% after it said that its trading in the first four months of 2007 has been encouraging and marginally ahead of expectations.

Decliners

Shares in Swedish financial services group Swedbank fell 3% despite reporting a better-than-expected increase in Q4 profits. Strong trading revenues drove operating profit 18 % higher in the quarter, but investors were more concerned by rising costs. BBVA, the Spanish bank, fell 4% after it announced the sale of its stake in utility group Iberdrola and plans to issue 196 million new shares to help fund the $9.6 billion acquisition of Texas-based bank Compass Bancshares.

Oil and gold

Crude oil prices slipped Friday on forecasts for warmer weather in the U.S. Northeast, the largest heating oil market in the world. Light, sweet crude for March delivery dropped 5 cents to $57.94 a barrel on the New York Mercantile Exchange. Gold bullion opened Friday at a bid price of $666.30 a troy ounce, down from $667.30 late Thursday on the New York Mercantile Exchange.

Currencies

The dollar was mixed against other major currencies in European trading Friday morning. The euro traded at $1.3122, down from $1.3142 late Thursday. The British pound traded at $1.9483, down from $1.9511. The dollar traded at 119.36 Japanese yen, up from 119.18.