Spain's BBVA bank to start Sabadell offer Monday

The proposed deal aims to create a European banking powerhouse capable of competing with industry heavyweights such as Santander, BNP Paribas and HSBC.

BBVA, Spain's second-largest bank with a big footprint in Latin America and Turkey, announced its all-share bid in May 2024, valuing Sabadell at around €15 billion ($18 billion).

The CNMV stock market regulator ruled that BBVA will have 30 days, beginning on September 8, to get enough Sabadell shareholders to accept the proposal.

"The offer is conditional on the acceptance of a minimum number of shares representing more than half of the voting rights of Banco Sabadell, excluding treasury shares," it said in a statement.

BBVA said its offer is "very attractive", reflecting Sabadell's "best valuation in more than a decade, while incorporating a premium clearly higher than that of recent similar transactions in Europe".

"Following the merger, Banco Sabadell shareholders are set to obtain earnings per share 25 percent higher than they would with a standalone Banco Sabadell," BBVA chair Carlos Torres Vila added in a statement after the CNMV announced its decision.

But Sabadell chairman Josep Oliu hit back, saying his lender had grown more in value, and provided more rewards to its shareholders, than BBVA had since the takeover bid was announced in May 2024.

"It looks like a weak offer based on unrealistic assumptions, but we'll need to analyse it in detail before giving a full opinion," he added in a statement, saying the bid "undervalued our entity's standalone project".

Hurdles

Sabadell, Spain's fourth-largest bank, has taken steps to fend off the bid, including the sale of its UK subsidiary TSB to Santander for €3.1 billion in what was seen as an effort to weaken its appeal as a takeover target.

Analysts said selling TSB would also give Sabadell more cash for dividends, share buybacks or acquisitions that could reduce the appeal of BBVA's offer to shareholders.

Founded in 1881 near Barcelona, Sabadell has a dispersed ownership structure. No investor holds more than seven percent of the bank, making the outcome of the takeover bid uncertain.

BBVA has already navigated approvals for its offer from the European Central Bank and Spain's competition authority, and overcame opposition from the left-wing Spanish government, which expressed concerns about reduced competition.

Madrid imposed strict conditions in June, requiring a three-year freeze on any merger between the two lenders to safeguard market competition, a move seen as a major roadblock to the deal.

BBVA reported a record net profit of €5.45 billion for the first six months of the year, up 9.1 percent from €4.99 billion in the same year-ago period.