Banco Bilbao Looks Like Buyout Bait

On An Even Keel
Recent cross-border deals in banking have drawn attention to major underpriced banks overseas. One such is Banco Bilbao Vizcaya Argentaria (BBC ), Spain's second-largest, which provides financial and investment services in Europe, the U.S., and Latin America. "It's a very innovative bank with great management, and is the leading bank in Mexico. But its stock has trailed its peers," says Donald Gimbel, senior managing director at Carret Asset Management, which owns shares. Now at 25.18, Bilbao would be a great catch for the likes of Spain's No. 1 bank, Banco Santander, (STD ) or any major bank, says Gimbel. He puts Bilbao's worth, with a market cap of $89 billion, at 35 to 40 a share. Carlos Berastain Gonzales of Deutsche Bank (DB ) in London also sees Bilbao as a buyout plum. He figures its pieces add up to 36 to 41 a share. This range, he says, depends on whether Bilbao is bought by a bank with no synergy potential, at multiples in line with past deals, or whether it is acquired by a consortium operating in the same businesses as Bilbao.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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