BBVA makes $13bn hostile takeover bid for Banco Sabadell

Spanish banking giant BBVA has extended a purchase offer to Banco Sabadell’s shareholders, aiming to acquire a controlling stake of 50.01% in the company. This move follows the rejection of a similar offer by Sabadell’s board of directors last week.

Under the terms of the offer, Banco Sabadell’s shareholders would receive an exchange ratio of one newly issued BBVA share for every 4.83 Sabadell shares, representing a premium of 30% over the closing prices on April 29. The proposed transaction is valued at over $13 billion.

Despite the rejection by Sabadell’s board, BBVA remains confident in the potential of the deal to create “one of the best banks in Europe,” with a significant share of nearly 22% in the Spanish loan market. BBVA’s chair, Carlos Torres Vila, emphasizes the strategic importance of the merger, highlighting the positive impact it would have on the markets where both banks operate, particularly in Spain with an additional €5 billion loan capacity per year.

The acquisition of Banco Sabadell, Spain’s fourth-largest private banking group, would strengthen BBVA’s position in the domestic market. However, the success of the deal depends on approval from Banco Sabadell’s shareholders and regulatory bodies, including the Spanish Market and Competition Regulator (CNMC) and the UK’s Prudential Regulation Authority.

Despite BBVA’s optimism, the proposed merger faces opposition from the Spanish government. Concerns have been raised by Yolanda Diaz, the country’s labor minister, and Spain’s economy minister Carlos Cuerpo, who has described the deal as “potentially damaging.” The government asserts its authority over the final decision regarding the deal’s authorization.

If approved, the deal is anticipated to close within the next six to eight months, with a subsequent technical integration process expected to take between 12 and 18 months. This latest attempt at a merger between BBVA and Banco Sabadell follows unsuccessful negotiations in 2020 due to pricing disagreements.

Source: fintechfutures.com