Spanish bank Sabadell has officially rejected a hostile takeover bid from its larger national rival, BBVA, urging its shareholders to decline the proposal as well. As the deadline for a decision looms, the proposed merger aims to establish a formidable European banking entity that could rival industry giants like Santander, BNP Paribas, and HSBC.
BBVA, which ranks as Spain’s second-largest bank and boasts a significant presence in Latin America and Turkey, put forth its all-share bid back in May 2024, valuing Sabadell at approximately 15 billion euros (around $18 billion). Following approvals from the European Central Bank and Spain’s regulatory bodies for competition and stock markets, BBVA shifted its focus to convincing Sabadell’s shareholders within a 30-day window that commenced earlier this week.
In a statement released on Friday, Sabadell’s board expressed that the offer’s pricing does not reflect the true intrinsic value of its shares, suggesting that it significantly underestimates the bank’s potential. The board unanimously deemed the takeover as detrimental to the interests of its shareholders and recommended that they reject the proposal outright.
Founded in 1881 near Barcelona, Sabadell operates under a dispersed ownership structure, with no single investor holding more than a seven percent stake. This dispersion adds complexity to the potential outcome of BBVA’s bid. The leadership at Sabadell is steadfast in its commitment to maintaining the bank’s independence and has previously signaled opposition to the takeover, even going so far as to divest its UK subsidiary, TSB, to BBVA’s principal competitor, Santander.
Analysts contend that the sale of TSB would strengthen Sabadell’s financial position, allowing it to invest in dividends, share repurchases, or new acquisitions, all of which could diminish the attractiveness of BBVA’s offer for shareholders.
In addition to these corporate dynamics, Spain’s left-wing government has expressed concerns about the implications of reduced competition in the banking sector. In June, they implemented stringent measures to impose a three-year moratorium on any potential merger between BBVA and Sabadell, emphasizing the administration’s commitment to preserving competitive market conditions.
