Spain’s second-largest bank is close to becoming Europe’s third-largest bank by market capitalization, behind only HSBC and Santander.
BBVA has raised its hostile takeover bid for Banco Sabadell by 10% to €17 billion (about $20 billion). The revised allshare proposal – one BBVA share for every 4.8376 Sabadell shares – would eliminate the previous cash component. The upside is that if more than half of Sabadell’s shareholders accept the deal, they won’t have to pay capital gains tax immediately.
With the approval of Spain’s National Securities Market Commission, the offer now enters a crucial stage before the October 10 shareholder deadline and opens the door for Sabadell investors to consider the offer.
Under the updated terms, shareholders of the Catalan bank will own a 15.3% stake in the combined entity.
However, BBVA’s bid still faces stiff opposition. Sabadell’s board has unanimously recommended that shareholders reject the offer, arguing that even an improved offer undervalues the bank, especially in light of recent gains from divestitures of companies such as British retail bank TSB.
Sabadell’s CEO, Cesar Gonzalez Bueno, denounced the offer as “worse than the original offer,” saying it lacked a sufficient premium and could expose shareholders to tax and legal risks if less than 50% accepted it.
Investors are divided. Major asset managers such as BlackRock, Vanguard and Norges are seen as central to the outcome, but their positions remain unclear. Market watchers warn that a 10% increase may not be enough to convince major shareholders who are already skeptical of regulatory constraints and synergies.
In addition, the Spanish government has mandated that, even at the takeover stage, BBVA and Sabadell must remain separate legal entities for at least three years – a requirement that some see as limiting the feasibility of the deal. The European Commission warned Madrid against obstructing a legal takeover with disproportionate terms that could violate European Union rules.
If successful, the takeover would elevate BBVA into the top tier of European banking, highlighting a long-awaited wave of consolidation in a sector often seen as too fragmented to compete globally. But as the October deadline approaches, whether the bid will overcome political resistance, regulatory restrictions and shareholder hesitation remains far from certain.
