BBVA makes hostile takeover bid for Banco Sabadell

Spanish banking group BBVA has proposed a hostile takeover of smaller peer Banco Sabadell, taking its €12.2bn offer directly to shareholders after the latter's board rejected an approach earlier this week.

The deal represents a 30% premium to the closing price of Banco Sabadell as of 29 April – the day before talks began – and a 50% premium to the weighted average share price over the past three months.

Sabadell's management has already responded to BBVA's earlier offer, saying it significantly undervalued the bank, prompting BBVA to address its target's shareholders directly with a formal offer.

However, according to an interview on Spanish television, Economy Minister Carlos Cuerpo said the Spanish government – which has the power to block any merger – is opposed to the hostile takeover.

BBVA said the deal would have "very positive financial impacts" due to operational synergies and complementary services, creating one of the biggest banks in Europe, holding 22% of the loan market in Spain.

The merger would result in Sabadell shareholders holding a 16% stake in the combined entity, while giving BBVA shareholders "clear value creation" with earnings per share expected to improve by 3.5% once complete.

“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," said BBVA chair Carlos Torres Vila.

"Together we will have a greater positive impact in the geographies where we operate, with an additional €5bn loan capacity per year in Spain.”

This month's approach follows a collapsed takeover talks back in 2020 after both parties failed to agree on terms.

Sabadell shares were up 3.5% at €1.86 by 1252 in Madrid while BBVA was down 6% at €9.68.