Banco Sabadell's board rejects Bbva's takeover bid: 'It undervalues the institution'

Banco de Sabadell raises a new wall against Bbva: as widely expected, the board of directors rejected the hostile takeover bid of rival Bbva.

Now the market is weighing the possibility of a relaunch by Bbva in the face of the Catalan bank's 'no'. A raise that should be substantial: on the basis of current stock market prices, the Opa is worth around EUR 15 billion against Sabadell's almost EUR 17 billion capitalisation. For now, Sabadell's board 'unanimously recommended to its shareholders to reject Bbva's share exchange offer as it significantly undervalues the bank, its strategic plan and its future prospects. Banco Sabadell had already rejected Bbva's merger proposals in November 2020 and May 2024 and has since recorded a much stronger stock market performance than its rival,' a statement said.

The board stated that it 'has full confidence in Banco Sabadell's growth strategy and its ability to achieve its financial objectives, and believes that the offer destroys shareholder value, whereas Banco Sabadell's strategy as an independent bank will generate greater value and higher returns for its shareholders than the integration with Bbva'.

The board believes that 'the best option for the shareholders is not to accept the offer' because, among other reasons, 'it is lower than the current market price of Sabadell shares, so accepting it would result in the loss of part of the current value of their investment, which is about 10 per cent as of 10 September'.

The official rejection of the board of directors of Sabadell, Spain's fourth largest bank - in the wake of the disagreement already expressed on several occasions - came after the launch of the one-month-long takeover bid, which started last Monday. The Bbva is offering one newly issued ordinary share and EUR 0.70 in cash for every 5.5483 ordinary shares in Sabadell. Number two in the Spanish banking sector, behind Santander, Bbva has over 78 million customers in 25 countries, with a strong presence in Latin America, particularly in Mexico, as Sabadell points out. The union of the two groups would create Spain's second largest bank by domestic assets, after Caixabank. Sabadell has also tried to counter the Opa by selling its British subsidiary Tsb to Santander for EUR 3.1 billion and promising record remunerations to shareholders, also thanks to this sale. Its shareholder base is also diffuse, with none of the major shareholders owning more than 7 per cent of the group, which makes the outcome of the takeover bid, due to close on 7 October, less predictable. The transaction has had a troubled path since its first announcement in May 2024 and has been opposed both locally and politically. The merger between the two banks has aroused reservations within the Spanish government for fear that it would reduce competition in the banking sector. For this reason, the government of Socialist Pedro Sanchez has imposed strict conditions, such as a ban on mergers between the two groups for at least three years.