Efforts by Spanish lender BBVA to create Europe’s third-biggest lender appear to be coming to a head, but whether the deal will go through remains an open question.
The Basque bank first announced its intention to launch a takeover of Sabadell in April of 2024. But with both the Sabadell board and the Spanish government opposed to the operation, it has had to modify its bid.
Its new, all-stock offer, unveiled this week, is worth €17 billion euros, up from €15.5 billion euros previously.
Sabadell, which has 6.5 million customers, has much of its business in the Catalan region. With 13 million customers, BBVA has become a global brand with a major presence across Spain and Latin America and it sees this as an opportunity to turn its focus back to the Spanish market.
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BBVA chairman Carlos Torres has argued that the merger would be good for the Spanish economy, generating a higher tax base and giving the country a stronger financial presence in Europe. He has described the offer as “tremendously attractive” for Sabadell shareholders, who must now decide whether to approve it.
But Sabadell’s CEO, César González Bueno, has described the new offer as “weak and bad”.
The left-wing government has also expressed concerns about the takeover, warning of job losses and competition issues. It has imposed conditions on any potential deal, meaning that a full merger would not happen for at least three years.
BBVA has said it will not improve its offer any further and in theory, Sabadell’s shareholders must issue their verdict by October 7th, although that date can be shifted.
Success, from BBVA’s point of view, would be if the takeover receives 50 per cent support. If there is less than 50 per cent backing but more than 30 per cent, the takeover could still flourish, but with limitations. Less than 30 per cent support would appear to spell the end of BBVA’s efforts to create a new super-bank.
