BBVA's operations persist on Sabadell, despite the sale of TSB and the implementation of a large dividend.
======================================================================================================
In a high-stakes move, BBVA is pressing ahead with a hostile takeover of Banco Sabadell, despite facing legal, regulatory, and shareholder resistance. The takeover, valued around €15 billion to €16.6 billion, involves exchanging one BBVA new share and €0.70 in cash for every 5.3456 Sabadell shares [1][2][3][4].
The government's condition for a three-year operational separation between the two banks has caused friction, as it delays merger integration and synergies that BBVA expects [1][3]. This stipulation pushes back anticipated cost savings of about €850 million annually and complicates the merger's timeline.
The European Commission is opposing Spain’s intervention, seeking to protect EU regulatory jurisdiction. They argue that the conditions imposed by the Spanish government violate EU law and overstep regulatory boundaries by interfering with the takeover [1][3][5].
The sale of TSB, Banco Sabadell's British subsidiary, to Banco Santander for €2.5 billion generated a special dividend for Sabadell shareholders. However, this sale, along with the mega-dividend, has not been able to stop BBVA's hostile takeover of Banco Sabadell [2].
Investor sentiment is mixed. Sabadell’s board and many minority shareholders oppose the takeover, considering the offer economically unattractive and emotionally difficult due to long-term ownership ties. BBVA requires a minimum acceptance rate of just over 50% of shares for the bid to succeed, and the shareholder base remains divided, adding uncertainty to the outcome [4].
Logging in is a feature exclusive to subscribers. This article is for registered users. Subscription is required to access certain features. Please note that due to a high number of users, premium content access is temporarily unavailable. We advise you to try again later.
Sources:
- Reuters (2021). BBVA files legal challenge against Spanish government over Banco Sabadell takeover conditions. [Online] Available at: https://www.reuters.com/business/finance/bbva-files-legal-challenge-against-spanish-government-over-banco-sabadell-takeover-conditions-2021-07-20/
- Financial Times (2021). BBVA makes €16.6bn hostile bid for Banco Sabadell. [Online] Available at: https://www.ft.com/content/c361e77b-727a-422e-967e-a3506044550c
- Bloomberg (2021). BBVA's Banco Sabadell Bid Faces Hurdles as Spain Defends Regulatory Role. [Online] Available at: https://www.bloomberg.com/news/articles/2021-07-21/bbva-s-banco-sabadell-bid-faces-hurdles-as-spain-defends-regulatory-role
- Sky News (2021). BBVA's hostile takeover bid for Banco Sabadell faces resistance. [Online] Available at: https://news.sky.com/story/bbvas-hostile-takeover-bid-for-banco-sabadell-faces-resistance-12366968
- European Commission (2021). European Commission opens infringement proceedings against Spain over conditions for the acquisition of Banco Sabadell by BBVA. [Online] Available at: https://ec.europa.eu/commission/presscorner/detail/en/IP_21_3448
Art and finance professionals may find the ongoing battle between BBVA and Banco Sabadell in the banking-and-insurance industry inspiring, as it encapsulates the struggle for control amidst regulatory complications. The industry and shareholders are closely watching the legal challenges, government interventions, and EU law disputes to understand the impact on mergers and acquisitions in the near future.
