Spain's Banco Bilbao Vizcava Argentaria, better known as BBVA, is paying $5.8 billion to get a slice of the fast-growing Turkish lending environment and one of the world's best banks.
The Turkish economy is growing as fast as China's -- well into double-digit territory at 10.3% a year -- and is directly exposed to the euro zone as well. As a bonus, TKGBY is arguably the best bank in emerging markets, bar none.
In fact, while BBVA shares initially dipped on the news that the company would be issuing about $7 billion in new stock to pay for the acquisition, they were back up over 1% by mid-morning. Meanwhile, TKGBY shares are now down amid disappointment that the deal fails to value the company at a premium to its roughly $25 billion market capitalization.
If anything, BBVA is getting its 25% stake in the company at a steep discount thanks to its decision to buy directly from strategic shareholders Dogus Holding and GE (GE) instead of picking up the shares on the open market.
Further expansion into Russia and North Africa may be on the agenda for the now-aligned companies, but for now, BBVA wins by further diversifying its business footprint out of Spain.
Disclosure: No positions