BBVA bank launches hostile takeover bid for Sabadell, which Madrid threatens to block

BBVA bank launches hostile takeover bid for Sabadell, which Madrid threatens to block
BBVA bank launches hostile takeover bid for Sabadell, which Madrid threatens to block

Madrid (awp/afp) – Three days after the rejection of its friendly merger offer, the Spanish bank BBVA launched a hostile takeover bid on its competitor Sabadell on Thursday, deemed “contrary to the interests” of Spain by the government, which threatens to derail it.

This takeover bid, supposed to give birth to a European banking giant, is carried out under the same conditions as the proposal refused Monday by Sabadell, namely an exchange of one new BBVA share for 4.83 Sabadell shares.

“This is an extraordinarily attractive offer,” said the president of BBVA, Carlos Torres, praising during a press conference the “complementarity” of the two groups and the advantage of a rapprochement for the entire “Spanish economy”.

An analysis rejected by the government of socialist Prime Minister Pedro Sánchez, who immediately spoke out against this offer.

This is an operation “contrary to the interests” of Spain, judged the communist Minister of Labor Yolanda Diaz, number three in the government.

It risks destroying “many jobs” and “killing Sabadell for the sole benefit of foreign investment funds which own BBVA”, she continued.

Its effects will be “potentially damaging”, added Economy Minister Carlos Cuerpo, warning that the government would have “the last word when it comes to authorizing the operation”, problematic “both in substance and in on Form”.

Mr. Cuerpo did not detail the room for maneuver available to the executive to block this takeover bid, which must receive the green light from the ECB and the competition police of several countries, including Spain and the United Kingdom. , where both groups have activities.

Confident BBVA

Asked about these criticisms, Carlos Torres said he was convinced “that the government and other authorities will end up appreciating the operation at its true value”, likely to increase, according to him, “the lending capacity” to businesses and individuals.

BBVA’s proposal would allow Sabadell shareholders to own 16% of the future banking giant. It values ​​Spain’s fourth-largest bank at more than 11.5 billion euros.

This amount was considered insufficient on Monday by the management of Sabadell, which judged BBVA’s offer contrary to the interests of “its shareholders”, but also of its “customers” and its “employees”.

BBVA’s offer, the success of which is conditional on obtaining at least 50.01% of the capital of Sabadell, is therefore now in the hands of the market.

Sabadell has no controlling shareholder, its capital being held by a multitude of investors, including large investment funds.

On the Madrid Stock Exchange, Sabadell shares ended the session with a gain of 3.17%, while BBVA shares suffered a fall of 6.71%.

“Competition issues”

BBVA first attempted to absorb Sabadell in November 2020, but again encountered refusal from the Catalan bank, due to an offer already considered insufficient.

The BBVA group, originating from the Basque Country, is present in 25 countries and employs nearly 121,000 people. It is the second largest Spanish bank in terms of capitalization (60 billion euros) and number of customers (74.1 million).

Sabadell, whose head office was transferred to Alicante (south-east) after the failed attempt at secession of Catalonia in 2017, is the fourth in the country with 20 million customers and 9.8 billion in capitalization. It employs 19,000 people.

Their merger could give rise to a group capable of competing with Santander, the leading Spanish bank with 72 billion euros in capitalization and 166 million customers, and with other European giants, such as HSBC or BNP Paribas.

However, employee unions are concerned about the consequences on employment, but also on the services offered to customers in a market which would be concentrated around a handful of groups.

This takeover bid “could be the first of a new phase of concentrations, motivated by the exuberance of profits, which would aggravate the problems of competition” and “financial exclusion”, warned the Workers’ Commissions union in a press release ( CCOO).

The Spanish banking sector has undergone significant consolidation since the 2008 financial crisis, marked by the virtual disappearance of regional savings banks. This phenomenon has resulted in tens of thousands of job losses.

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