BBVA launches hostile takeover bid for Banc Sabadell

BBVA has launched a hostile takeover bid to take control of Banc Sabadell, according to a statement sent to the Spanish stock market regulator (CNMV). 

The Basque bank's offer is the same as the one rejected by Sabadell's board earlier this week, which the Catalan bank turned down because it was "undervalued."

Now it will be up to the shareholders to decide whether they accept it or not. Almost half of Banc Sabadell shareholders are small investors.

The document sent to the CNMV confirms that BBVA is going ahead with a takeover bid "directed at all shares" of Banc Sabadell, all 5.44 billion, with a nominal value of €0.125 each.

Contrary to last week's offer, BBVA does not reserve "any advantage" for Sabadell's shareholders or directors.

Shortly after the takeover bid was announced, BBVA said the offer was "exceptionally favorable" for the Catalan company's shareholders. 

Spanish government rejects bid

Shortly after the bid was announced, the Spanish government rejected it warning that it could have "potentially damaging effects" on the Spanish financial system.

Sources close to the government said it could hurt both employment and the supply of financial services. They add that excessive bank concentration would create an additional "risk" to economic stability. 

"Spain has a strong and solvent financial system. Our responsibility is to ensure a solid economic system that continues to contribute to the growth of our economy, the financial inclusion agenda and the protection of clients," the government said. 

Spanish labor minister Yolanda Díaz has come out against the bid, saying it will provoke "more oligopoly."

Meanwhile, BBVA puts the Spanish government's response down to electioneering. "There are elections this Sunday, there is a lot of politicization," BBVA president Carlos Torres said in a conference call with analysts.

Torres is convinced that the Spanish administration will end up endorsing the hostile takeover bid, explaining that he thinks authorities "will appreciate the value of the operation."

He backed the hostile takeover bid as the resulting entity would turn into "a European and global bank" that will guarantee "better support" for the economy.

The Basque entity estimates that obtaining authorization from regulators will take 6-8 months and that the whole process will last until mid-2025.

One of the announcements made by Torres is that there could be a possibility of having to do a furlough scheme in the near future, if the tender offer goes ahead.

"In the short term, maybe there will be some departures. We have a lot of experience with furlough schemes, and we always do it in a way that's not traumatic," he said.

Catalan government against takeover

Catalonia's Minister of Economy and Finance, Natàlia Mas Guix, has expressed concern about the takeover offer. She sees the operation as "bad" for Catalonia because it would mean "a drastic reduction in competition" resulting in "the highest banking concentration in Europe."

Mas Guix stated this in an interview with radio station RAC1 on Thursday morning where she recalled that Spain already has one of the highest concentration of banks in the market, only surpassed by Cyprus.

The bid "should not get the endorsements of the competition," she said, adding that the potential merger would lead to the "loss of jobs and loss of economic power for Catalonia."

Catalan president Pere Aragonès also rejected the hostile bid proposal.

Through his Twitter account, Aragonès said that the merger "would only worsen the lack of competition we already suffer, destroy jobs, and undermine the economic power of Catalonia." 

Aragonès remarked in an interview with Spanish public broadcaster TVE that it is the first hostile takeover bid in this field and that it has opened a "new scenario."

Political reaction

Amid the ongoing Catalan election campaign, candidates have been reacting to the news on Thursday morning and afternoon. 

Junts+ candidate Carles Puigdemont rejected the acquisition attempts, considering it "unacceptable." "The hostile takeover bid against Banc Sabadell must be responded to with all the force, with all the right, and with all reason," Puigdemont said in a post on 'X', formerly Twitter.

The former Catalan president assured that there was "a strategy to liquidate Catalan banking activity for some time" which "harms users and harms the country."

Comuns Sumar candidate Jéssica Albiach asked the Spanish government to "put a stop" to BBVA. At a campaign event, she called on the state executive to urge the CNMC to stop the operation. "It is necessary to put limits on the greed and ambition of the banking sector," she warned.

Alejandro Fernández of the People's Party said he was "enormously concerned" about BBVA's hostile takeover bid as it "negatively" affects small- and medium-sized businesses in Catalonia. "I don't like it," he added in his post on social media. 

Ciudadanos candidate Carlos Carrizosa sees the takeover bid as "legitimate" because it responds to the "rules of the market" which, he says, must be respected. Carrizosa says that there is "nothing to object" about the operation.

However, the party admits that the concentration of the financial market could have a negative impact on consumers and this is where they ask the Spanish government to act so that there is no "loss of rights" for customers.

BBVA's offer to Banc Sabadell

The BBVA's offer includes a 30% premium per share and a guarantee of "total commitment" to Catalonia. 

BBVA also offers Sabadell three seats on its board of directors, one of them as vice president. 

Its proposal includes having two corporate headquarters, maintaining Sabadell's current offices in Sant Cugat, just outside Barcelona. 

BBVA said it would maintain the Sabadell brand in areas where there is "relevant commercial interest."