BBVA shares jump, Sabadell tumbles as takeover bid collapses

Investing.com --  Shares in BBVA jumped Friday after the bank said it would immediately resume share buybacks following the collapse of its €16.32 billion ($19.09 billion) hostile bid for Sabadell.

BBVA stock rose nearly 6% while shares in Sabadell plunged more than 7% on the news.

Only 25.47% of Sabadell shareholders tendered their voting rights, falling short of even the lower threshold that would have allowed BBVA to proceed had it chosen to waive the minimum acceptance condition. Spain’s market regulator confirmed the offer was void as it failed to meet the required 30% participation level.

RBC Capital Markets analysts said the failed takeover "comes with some relief, not because the transaction was a bad one, but because the uncertainty overhanging both banks had lasted far too long."

The decision ends an almost 18-month pursuit during which BBVA, Spain’s second-largest lender, attempted to take control of Sabadell, the country’s fourth-biggest bank.

Analysts had viewed the bid as an important test for consolidation in Europe’s banking sector, where rising profitability, large shareholder payouts and potential dealmaking have lifted valuations.

BBVA said it would accelerate capital returns now that the bid has lapsed. A previously announced share buyback of around €1 billion will begin later this month, and the bank plans a further buyback once it receives clearance from the European Central Bank.

BBVA had aimed to create a lender that would rank as Europe’s third-largest by market value, behind HSBC Holdings and Banco Santander.

The proposed acquisition was designed to strengthen BBVA’s position in Spain to offset its reliance on emerging markets such as Mexico and Turkey, which generate a large share of its earnings.

Sabadell’s network of small and midsize business clients and its strong presence in eastern Spain would have complemented BBVA’s footprint in corporate and retail banking.