Spanish banking giant BBVA has launched a rare hostile takeover bid for its smaller domestic rival Banco Sabadell, which owns UK high street bank TSB, after the latter’s board rejected an offer.
BBVA has this morning taken an €12.2bn (£10.5bn) all-share merger proposal for Sabadell directly to shareholders. The offer values the bank’s shares at €2.13 (£1.93) each.
This price represents an 18 per cent premium to Sabadell’s closing price on Wednesday.
BBVA’s latest move comes after Sabadell rejected a merger proposal last week. It offered an exchange ratio of one newly issued BBVA share for every 4.83 Sabadell share – a premium of 30 per cent to the stock’s closing price before the offer.
Sabadell said the “unsolicited, indicative and conditional proposal” undervalued the bank’s potential.
Carlos Torres, BBVA’s executive chair, wrote to Sabadell last week saying the bank had “no room” to raise its offer, citing the latter’s growing share price.
“We are presenting to Banco Sabadell’s shareholders an extraordinarily attractive offer to create a bank with greater scale in one of our most important markets,” he said on Thursday.
BBVA chief executive Onur Genc added: “Banco Sabadell has done an excellent job, with remarkable progress in recent years, and now its shareholders can join an entity with an unparalleled combination of growth and profitability in Europe,” Genc said.
Despite enjoying a boost to their share prices on the back of higher profits since last year, Spanish banks are looking to increase their revenue as the tailwind from higher interest rates fades.
BBVA is Spain’s second-biggest bank, while Sabadell is the fourth-largest. The combined group would boast 100m customers worldwide and total assets of more than one trillion euros (£858bn) – second only to fellow Spanish lender Santander, which is the biggest bank in the eurozone.
A source at the Economy Ministry told Reuters that the Spanish government opposed the hostile takeover bid, saying it considers the merger would have potential harmful effects on the Spanish financial system and would impact jobs and customers.
Sabadell and BBVA previously called off merger talks in November 2020 after disagreeing on the terms and price of the deal.
City A.M. approached Sabadell for comment.