Spain's Banco Bilbao Buys Into Remarkable Turkish Growth With Turkiye Garanti

Includes: BBVA, TKGBF
by: Emerging Money

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.

Buying a 25% stake in Turkiye Garanti Bankasi OTCQX:TKGBF with an option to go for outright control by 2015 is a great move for BBVA.

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 (NYSE: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