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The chair of Spanish bank BBVA has declared that its hostile bid for rival Sabadell is “unstoppable” and should have little trouble overcoming regulatory or political challenges.
The biggest European banking deal of the year is entering a crucial stage, with BBVA shareholders due to vote on raising additional capital to support the €10bn all-share tender offer at an emergency meeting next week.
In an interview with the Financial Times, BBVA executive chair Carlos Torres said the Sabadell board had been wrong to reject his bank’s friendly approach last month. “They say it’s about the economics . . . but I think they’re kidding themselves,” he said.
“They have that self-confidence and they believe that they can continue to create value and maybe integrating with BBVA they might view as a bit of a cold shower. I can empathise with that, but it’s not the right answer.”
He added: “This is a great offer. It’s a knockout offer. It’s an amazingly rich offer.”
If the vote on BBVA raising additional capital is approved, the bank must then wait for European and Spanish regulators to give its takeover bid the green light or demand any remedies to address competition concerns.
The next stage would be to open the tender offer to Sabadell shareholders, who must sell more than 50 per cent of the smaller lender’s shares for BBVA to succeed in its pursuit.
The final step in the process comes with complications: Spain’s Socialist-led government must rule on the merger of the two entities and has said it will veto the tie-up even if BBVA already owns Sabadell. Even if BBVA prevails, the deal is unlikely to be completed until mid-2025.
Torres first approached Josep Oliu, his opposite number at Sabadell, in mid-April and the offer is based on a 50 per cent premium on Sabadell’s share price at that point. Since then, Sabadell’s shares have risen 28 per cent and BBVA’s have dropped 6 per cent, reducing the premium to just 7 per cent.
The BBVA chair said Sabadell’s share price rise reflected investor expectation that his bank’s bid would succeed.
However, a person close to Sabadell said the long bidding process made that outcome uncertain.
“The overwhelming opposition to the transaction from almost every stakeholder group shows this is far from a done deal,” they added. “The impact of any transaction on competition in an already concentrated market in Spain is front of mind for stakeholders.”
Proxy advisers ISS, Glass Lewis, Corporance and Pirc have all recommended BBVA investors vote in favour of the capital increase at next Friday’s EGM, though each qualified their support by saying the hostile bid — a rare move in Spain — created uncertainties around the deal being completed.
Torres said he had received support from BBVA’s shareholders for the takeover, including those investors that also held stakes in Sabadell. “The value of Sabadell is relying entirely on the value of our offer,” he said
The next stage in the process would be for the European Central Bank and Spain’s market regulator to give their approval, which is expected as no solvency issues are involved.
Spain’s antitrust watchdog must also weigh in on the deal and Torres said he expected that any amendments requested for competition reasons would be acceptable.
Carlos Cuerpo, Spain’s economy minister, has however listed competition issues among the government’s concerns, along with worries over employment, financial stability and even Spain’s “territorial cohesion”.
While the government has the final say on the merger, Torres said: “We’re confident that we can work together in addressing those concerns.”
“The transaction makes sense for Spain, for Europe,” he added, pointing out that just two of the world’s 20 biggest banks by market capitalisation were from Europe — HSBC and UBS — and neither of which were in the EU.
“That’s why we’re quite confident this is a train that’s unstoppable and this will happen. Not just because it’s good for shareholders, but it’s good for clients and it’s good for society as well,” he said.
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