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Spain-based lender Banco Sabadell has rejected a €12bn takeover bid from its larger rival BBVA, saying the proposed deal “significantly undervalues” its standalone growth prospects.
Last week BBVA unveiled a surprise offer for Sabadell, saying the combination of the two Spanish lenders would create “one of Europe’s largest and most robust financial entities”.
The rejection means BBVA must now decide whether to take the riskier path of launching a hostile bid in a country not accustomed to such dealmaking.
It is BBVA’s second attempt to acquire Sabadell in less than four years. The latest bid had sent the would-be buyer’s share price lower before the board of the smaller bank formally rejected the all-stock offer on Monday.
Sabadell, which owns UK high street bank TSB, said its board “believes that the proposal significantly undervalues the potential of Banco Sabadell and its standalone growth prospects”.
It added: “The board is highly confident in Banco Sabadell’s growth strategy and its financial targets and is of the view that Banco Sabadell’s standalone strategy will create superior value for its shareholders.”
BBVA responded by saying: “We regret that the board of Banco Sabadell has rejected such an attractive offer.”
Bankers and regulators have long made the case for more consolidation among Spanish banks, saying it would boost the sector’s resilience.
BBVA last week said a takeover of Sabadell would create a combined entity with complementary customer bases and the size needed to cope with future interest rate cuts and the accelerating digitisation of finance.
But some analysts had cast doubt on the scale of potential financial benefits stemming from the proposed deal.
When BBVA launched its bid it had a market capitalisation of just under €60bn, but that has fallen to €57.5bn since then.
Sabadell said in its statement that “the recent material decline and volatility in the BBVA share price increases the uncertainty around the value of the proposal”.
When it announced its bid, BBVA said it was offering a 30 per cent premium for Sabadell based on closing share prices last Monday and a 50 per cent premium above weighted average prices in the past three months.
The two banks attempted to strike a deal in 2020 during the Covid-19 pandemic, but talks broke down following disagreements over pricing.
Sabadell is being advised by Goldman Sachs and Morgan Stanley. UBS and JPMorgan are advising BBVA on its bid, said people briefed on the matter.
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