Ángel Ron, president of Popular, was convinced that the merger with his bank and Pastor would generate value from the very beginning. Thus is how he introduced the deal to acquire the Galician lender. However, several weeks after the deal was announced, experts seem unable to react to the deal and have frozen their estimations for future profits and share prices, perhaps with hopes that some concrete steps would be taken during the merger that will be finalized in Q1 of 2012.
Popular's objectives are clear: clean the balance sheet and improve profit-per-share by 1% within a year of completing the deal and by 3% by the end of 2014. Analysis firms are still not agreeing with this prediction, considering that they continue to predict average profit-per-share values of 0.34 and 0.42 euros per share for 2011 and 2012, respectively. That is to say, the predictions have not changed since before the merger was announced. The lenders are expected to increase in value by 2.5% and 27% in 2011.
Doubts about the merger's value
Popular was the first bank to make a move when the markets were hardly eager to doing deals and the banking sector was enduring pressure to recapitalize. The Spanish lender has destined around 1.6 billion euros to provisions. According to sources consulted by elEconomista, this amount is far greater than what Pastor was provided with and that no using them would lead to a "cleanup for Popular" and a strong mid-term increase in the lender's profit per share.
