A sign outside the offices of Banco Sabadell in the Banco Sabadell building on Wednesday, May 1, 2024 in Barcelona, Spain.
Bloomberg | Bloomberg | Getty Images
Spanish bank BBVA surprised markets on Thursday by announcing a rare hostile takeover of domestic rival Banco Sabadell, with one investment firm describing the situation as “very strange.”
The move comes shortly after BBVA’s separate €12 billion ($12.87 billion) takeover bid to Sabadell’s board was rejected earlier this week.
BBVA’s initial bid “significantly underestimated” the bank’s growth prospects, the board said on Monday, adding that its independent strategy would create superior value. BBVA reiterated that stance on Thursday with a direct all-share offer to the bank’s shareholders.
BBVA explain Its takeover offer has the same financial terms as the merger proposed to Sabadell’s board of directors. The company called the proposal “extremely attractive” and, if successful, would create Spain’s second-largest financial institution.
BBVA Chairman Carlos Torres Vila said in a statement: “We have made an attractive offer to the shareholders of Banco Sabadell, aiming to establish a business in one of our most important markets. One creates a larger bank.
“Together we will have an even greater positive impact in the regions where we operate, adding €5 billion of new lending capacity in Spain every year.”
BBVA shares were down 6% at noon London time on Thursday, while Sabadell shares were up more than 3%.
“Not that easy”
Hostile takeover bids are not common in the European banking industry and BBVA’s decision to proceed in this manner surprised many.
Carlo Messina, chief executive of Intesa Sanpaolo, Italy’s largest bank, told CNBC on Wednesday that domestic consolidation in the region’s banking sector faces major challenges.
He said that in the current market environment, it is difficult to complete a “friendly transaction” and a hostile takeover is “not easy to do.”
David Benamou, chief investment officer at Axiom, said BBVA’s offer for Sabadell reflected “a very strange situation indeed.”
In an interview with CNBC’s “Squawk Box Europe” on Thursday, Benamou said the proposed takeover bid “makes sense” from the perspective of Sabadell’s shareholders and, in his opinion, is likely to pass. He pointed out that BBVA’s offer represented a 30% premium to the closing prices of the two banks as of April 29.
“This echoes recent discussions in Switzerland about UBS’s merger with Credit Suisse and all the concerns about financial stability,” he added.
“I think it could be quite difficult to execute a deal, even though you could say it’s the same geographical location, but theoretically very close culturally, as opposed to a cross-border merger.”
Benamou said the burgeoning consolidation trend among European banks was logical, especially since many regional banks are “very small” compared with their U.S. peers.
Signs outside Banco Bilbao Vizcaya Argentaria SA (BBVA) bank (right) and Banco Sabadell SA (left) on Wednesday, May 1, 2024, in Barcelona, Spain.
Bloomberg | Bloomberg | Getty Images
Spain’s Economy Ministry said in a statement that the government rejected BBVA’s hostile takeover bid for Sabadell “in form and substance.”
The ministry also warned that the proposed deal “would have potentially harmful effects on the Spanish financial system”.
About The Author
