Spanish megabank in the making: BBVA gets greenlight to buy up Banco Sabadell

The Spanish stock market regulator authorised BBVA's takeover bid for Banco Sabadell on Friday.

This concludes the long-standing efforts of the Bilbao-based Spanish banking giant, BBVA trying to buy up its competitor.

"The Board of the Spanish Securities and Exchange Commission (CNMV) has authorised the voluntary public offer for the acquisition of shares in Banco de Sabadell, S.A. (Banco Sabadell) presented by Banco Bilbao Vizcaya Argentaria, S.A. (BBVA)," the statement said.

BBVA takeover

According to the ruling, the terms of BBVA's takeover bid, filed on 24 May 2024, are in compliance with current regulations. Therefore, the bank is authorised to make an offer to the shareholders of Sabadell, which includes one newly issued BBVA share plus a cash payment of €0.70.

"It is a very attractive offer, whose current equivalent value represents Banco Sabadell’s best valuation in more than a decade, while incorporating a premium clearly higher than that of recent similar transactions in Europe," BBVA commented after the ruling.

CNMV ruled that BBVA now has 30 days, beginning on 8 September, to get enough Banco Sabadell shareholders to accept their proposal. "The offer is conditional on the acceptance of a minimum number of shares representing more than half of the voting rights of Banco Sabadell, excluding treasury shares," read the statement.

Banco Sabadell has recently sold its British subsidiary TSB, weakening their appeal as a merger target and increasing its efforts to repel BBVA's interest. Sabadell also aimed to boost its returns to its shareholders, in another attempt to reduce its appeal to BBVA.

In July, Banco Sabadell announced a new strategic plan to deliver €6.3 billion of returns to shareholders over the next three years as it kicks off a programme accelerating growth and maintaining sustainable shareholder returns.

Sabadell also keeps a tab on its website for investors dedicated to the takeover bid, indicating how much shareholders would lose if they agreed to the merger.

But BBVA is also making bold promises in an effort to attract shareholders' trust. After the ruling, BBVA Chair Carlos Torres Vila said, "Following the merger, Banco Sabadell shareholders are set to obtain earnings per share 25% higher than they would with a standalone Banco Sabadell."

“The union of two highly complementary banks at their best moment has an undeniable logic, and is beneficial for shareholders, customers and employees of both entities, and society as a whole", adding that they can create a " European leader in growth and profitability."

The share prices of both lenders were up 0.2% at noon in Europe.