Spain's BBVA said on Monday it had raised its bid for the rest of Turkish bank Garanti, taking advantage of a slide in the lira with a 1.99 billion euro ($2.1 billion) offer to increase its emerging market exposure.
BBVA said it had upped its offer to TL 15.00 ($1.02) per share from TL 12.20 for the 50.15% of Garanti it does not own.
Despite increasing the offer by 23% to up to TL 31.60 billion, when valued in euros BBVA's bid is worth less than the 2.25 billion euros when it was initially announced on Nov. 15 as the Turkish currency has since depreciated by more than 28%.
The proposal means BBVA could potentially buy the remainder of Garanti for less than a third of the 7 billion euros it spent buying up the 49.85% stake it already holds.
Like bigger Spanish rival Santander (SAN.MC), BBVA has been expanding in emerging economies where it sees greater growth as it struggles to boost income in mature markets.
Although analysts mostly agree that the Garanti deal makes sense from a financial point of view, many have highlighted macroeconomic risks from betting on emerging markets.
"Investor views on BBVA increasing its exposure in Turkey at the current juncture remains negative, with this announcement unlikely to help the stock from that perspective," UBS said.
BBVA shares were down 2.3% at 7:53 a.m. GMT compared to a 0.7% decline of Spain's blue-chip index Ibex-35.
Spanish investment firm Alantra said that the revised terms indicated that BBVA was "looking to secure a large take-up from the Garanti bid."
BBVA said that as a result of the increase in bid price, the acceptance period has been extended to May 18 from April 29.
In accordance with Turkish takeover regulations, the bid price cannot be amended during this extension.
BBVA estimated a maximum impact of around 34 basis points in its common equity tier-1 fully loaded ratio, the strictest measure of solvency, assuming all Garanti shareholders accept the bid, down from an initially estimated 46 basis points.
