BBVA makes $13bn hostile takeover bid for Banco Sabadell
The board of directors at Spanish banking giant BBVA has presented a purchase offer to Banco Sabadell’s shareholders for 50.01% of the company, after Sabadell’s board of directors had rejected an offer on the same financial terms early last week.
BBVA has presented a takeover offer to Banco Sabadell’s shareholders
The deal presented to Banco Sabadell’s shareholders would see them receive an exchange ratio of one newly issued BBVA share for every 4.83 Sabadell shares, a premium of 30% over 29 April closing prices, resulting in a transaction total of over $13 billion.
These are the same financial terms that were offered to Banco Sabadell’s board on 30 April. This offer was quickly rejected by the board last week, with the directors describing the offer as significantly undervaluing the company.
BBVA claims that the proposed offer would create “one of the best banks in Europe”, boasting a Spanish loan market share of nearly 22%.
“We are presenting to Banco Sabadell’s shareholders an extraordinarily attractive offer to create a bank with greater scale in one of our most important markets,” says BBVA chair Carlos Torres Vila.
“Together we will have a greater positive impact in the geographies where we operate, with an additional €5 billion loan capacity per year in Spain.”
The potential purchase of Banco Sabadell, Spain’s fourth-largest private banking group, would enable BBVA to fortify its domestic market presence.
The proposed deal hinges upon the approval of Banco Sabadell’s shareholders and the endorsement from regulatory bodies such as the Spanish Market and Competition Regulator (CNMC) and the UK’s Prudential Regulation Authority. If greenlit, BBVA says Sabadell shareholders would hold a 16% stake in the newly merged financial institution.
The proposed merger does however face a stumbling block, with the Spanish government seemingly opposing the deal. Yolanda Diaz, the country’s labour minister, has reportedly expressed concerns, while Spain’s economy minister Carlos Cuerpo, in an interview with Spanish media, labelled the proposed agreement as “potentially damaging” and has said the government will “have the last word” before any potential deal gets authorised.
If approved, the deal is expected to close in the next six to eight months, with BBVA anticipating the technical integration between the entities to take between 12 and 18 months.
This is not the first attempt by both companies to reach a purchasing agreement. In 2020, the banks terminated merger negotiations as they couldn’t agree on a satisfactory pricing for the deal.
