Street Calls of the Week
Investing.com -- Banco Sabadell’s board has unanimously rejected BBVA’s hostile takeover bid, urging shareholders not to tender their stock, in a move that sets up a prolonged standoff between two of Spain’s largest lenders.
The decision was announced on Friday, days after BBVA formally launched its €14.9-15.3 billion offer for Sabadell shares.
Under the terms of the proposal, Sabadell investors were offered one newly issued BBVA share plus €0.70 in cash for every 5.5483 Sabadell shares.
The tender period runs until October 7, with results expected a week later. But Sabadell’s directors said the deal undervalues the bank, overstates potential cost savings, and leaves its shareholders exposed to risks tied to execution and regulatory limits.
The board also cited Spain’s regulatory restrictions on large bank mergers as a reason to resist.
Madrid has ruled that even if BBVA secures control, the two banks cannot fully combine for at least three years, curbing the ability to realize the €900 million in annual cost savings BBVA has projected by 2029.
This marks the second time Sabadell has rebuffed BBVA. In May 2024, the bank’s leadership rejected an earlier all-share offer, arguing that it would weaken Sabadell’s capital position.
Since then, Sabadell has delivered stronger earnings and a higher share price, reinforcing management’s view that the current bid undervalues the lender’s growth prospects.
For BBVA, the deal is intended to consolidate its domestic position and boost its presence among small and medium-sized business clients, a key segment where Sabadell has longstanding strength.
BBVA has argued that a combined entity would generate scale benefits and improve efficiency across Spain’s crowded banking market.
However, Sabadell’s leadership has pushed back on what it views as “optimistic” assumptions underpinning those forecasts.
Beyond valuation, Sabadell’s board raised concerns about minority shareholder protections.
Some regulators have questioned BBVA’s attempt to lower the acceptance threshold of the tender offer from a majority 50% to as little as 30%, which could allow it to exert control without full shareholder backing.