Spain’s BBVA launches €12.23b hostile bid for Sabadell

Spanish bank BBVA launched a hostile takeover bid for Sabadell, offering €12.23 billion ($13.1 billion) in an all-share deal after Sabadell’s board previously rejected the proposal earlier this week, Reuters reported on Thursday.

This direct approach to shareholders is unusual in European banking, where mergers typically involve lengthy negotiations and regulatory approval. The move could lead to months of wrangling, potentially involving politicians and regulators.

Sabadell’s board reiterated its stance that the bid undervalues the bank’s potential. BBVA’s stock price fell further on the news, while Sabadell’s shares rose. The decline in BBVA’s shares erodes the premium offered to Sabadell shareholders.

The Spanish government opposes the takeover, citing potential harm to the financial system and job losses. They claim the final say on approving the merger lies with them.

BBVA aims to create a financial powerhouse with over 100 million customers globally and assets exceeding one trillion euros.

This merged entity would be second only to Santander among Spanish banks. BBVA seeks to shift its focus back to Spain from its current primary market, Mexico.

Analysts believe the success of the bid hinges on negotiation and a potential increase in the premium offered.

A protracted hostile takeover could damage both banks, with Sabadell potentially facing a lengthy defense battle.