Spanish bank BBVA is headquartered in Madrid, Spain.
Juan Medina | Reuters
Spanish bank BBVA made a 12.23 billion euro ($13.11 billion) takeover bid for rival Sabadell directly to shareholders on Thursday, although Sabadell’s board rejected the offer this week on the same terms.
BBVA’s decision comes after Sabadell’s board said on Monday that the unsolicited takeover significantly underestimated the bank’s potential and growth prospects. The board reiterated that position Thursday.
Carlos Torres Vila, Executive Chairman of BBVA, said: “We have presented to the shareholders of Banco Sabadell a very attractive offer aimed at creating a larger business in one of our most important markets. Big banks.
Hostile takeovers are rare in European banking. A recent example is Intesa’s successful acquisition of UBI Banca in 2020.
In terms of market capitalization, BBVA, Spain’s second largest bank after Santander, proposed an exchange ratio of 1 newly issued BBVA stock for every 4.83 Sabadell shares, a 30% premium to the closing price on April 29.
Spanish banks have been looking for ways to boost revenue as the boost from high interest rates begins to fade.
The acquisition of Sabadell will allow BBVA to diversify away from its main market, Mexico, and other developing economies such as Turkey and South America, towards a focus on the domestic market.
BBVA CEO Onur Genc said, “All stakeholders will benefit from this operation.”
Genc said: “Banco Sabadell has done an excellent job and has made significant progress in recent years, and its shareholders can now join an entity with unparalleled growth and profitability in Europe.”
BBVA estimates that the deal will result in pre-tax cost savings of 850 million euros and will give Sabadell shareholders 16% of the combined bank.
BBVA’s goal is to create a bank with more than 100 million customers worldwide and assets of more than 1 trillion euros, second only to Santander among Spanish banks.
The combined entity would also surpass Caixabank to become Spain’s largest domestic bank, with more than 625 billion euros in assets in the country, compared with Caixabank’s assets of just over 574 billion euros.
Spain’s banking sector has gone through a period of consolidation as banks seek to cut costs and gain scale. Spain currently has 10 banks, down from 55 before the 2008 global financial crisis.
BBVA and Sabadell called off merger talks in November 2020 after they failed to reach agreement on terms, including price.
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