BBVA Launches Hostile Takeover Bid for Sabadell in $13.1bn Move

BBVA, Spain’s second-largest bank, surprised the financial market on Thursday by initiating a hostile all-share takeover bid worth 12.23 billion euros ($13.1 billion) for Sabadell. This bold move, following Sabadell’s board’s rejection of a similar bid earlier in the week, drew immediate opposition from the Spanish government.

The bid, aimed directly at Sabadell shareholders, underscores BBVA’s ambition to create a global banking powerhouse with over 100 million customers and assets exceeding 1 trillion euros. BBVA seeks to pivot its focus towards Spain and reduce dependence on its primary market, Mexico, through this merger.

BBVA’s Executive Chairman, Carlos Torres Vila, emphasised the attractiveness of the offer, highlighting the potential benefits for both banks. However, Spanish Economy Minister Carlos Cuerpo expressed government opposition, citing concerns about the deal’s impact on the financial system, jobs, and customers.

Despite the government’s reservations, BBVA remains confident in the deal’s value proposition and its ability to gain approval. The forthcoming elections in Catalonia, where Sabadell is headquartered, add a layer of complexity to the situation.

While European banking mergers historically face challenges, BBVA is optimistic about the proposed transaction’s prospects. The offer, which values Sabadell at around 11 billion euros, requires approval from a minimum of 50.01% of Sabadell shareholders and is expected to be finalised by mid-2025.

Analysts view the deal favourably in terms of antitrust concerns, and BBVA maintains openness to negotiation with Sabadell’s board despite the hostile bid. The bid’s success hinges on BBVA’s share performance, as it lacks a cash component.

This move marks BBVA’s second attempt at merging with Sabadell, reflecting a broader trend of consolidation in the Spanish banking sector. With potential cost savings estimated at 850 million euros before taxes, the combined entity would surpass Caixabank as Spain’s largest domestic lender, signalling a significant shift in the country’s banking landscape.