Why Spanish banking giant BBVA is launching a hostile takeover bid for Sabadell

On May 7, the Catalan bank Sabadell rejected the merger proposed by BBVA. Two days later, the Spanish banking giant returned with a hostile takeover bid.

© Zarateman/Wikimedia Commons

– BBVA launched a hostile takeover bid for its Catalan rival Sabadell.

This information had the effect of a bombshell in Spain: on April 30, the Spanish bank BBVA issued a merger proposal with its Catalan rival Sabadell. According to our colleagues from Echoesafter seven hours of debate behind closed doors, the board ultimately refusedbelieve it “the offer significantly undervalues ​​the Banco Sabadell project and its growth prospects as an independent entity”. But BBVA does not intend to stop there. Always according Echoestwo days after this categorical no on May 7, the banking giant returns to the fee, this time with Hostile takeover.

An operation comparable to the one proposed amicably on May 7 values ​​the Catalan bank at more than 12 billion eurosto be one 30% bonus compared to the April 29 price. But Sabadell has a fairly dispersed shareholder base, with more than half of its capital (53%) held by investors, starting with BlackRock (3.62%), Mexican investor David Martinez (3.56%) and Norges Bank (3.11%). A problem for BBVA, this hostile takeover bid caused outrage in Spain and the government undermined the project “both in form and substance”.

The rest under this ad

The rest under this ad

Also read: BNP Paribas, Crédit Agricole, Société Générale… Do banks have potential on the stock market?

European banking giant?

It will also have a Ministry of Economy “the last word as regards the authorization of the operation”. But because he is against… Spain’s Minister of Economy, Trade and Commerce Carlos Cuerpo called such an operation synonymous “new risks to financial stability”. Not to mention that too much banking concentration could affect employment and client services. But there are benefits for BBVA, at least that’s what the bank has tried to emphasize by ensuring that Sabadell retains its role with customers. Its CEO Carlos Torres also spoke“Extremely attractive offer”.

Also read: Société Générale: two traders dismissed for unauthorized operations

Are the shareholders of the Catalan bank in favor of such a transaction? Yes, according to Carlos Torres, and they would appreciate it “strongly”. Why does BBVA want to go all the way? Because the new entity would become a giant of this sector in Europe with more than “1,000 billion euros in assets”, according to BBVA. With more than 100 million customersthe entity would also have ambition “to become the largest bank in the Eurozone by market capitalization”. By consideration 74 billion euros on the stock marketthe new group would overtake Santander, decipher Echoesand would even be close to BNP Paribas. Will BBVA succeed in going against the government’s plans? Nothing is less certain because in the letter revealed by Sabadell, BBVA admits that it is not “no room for maneuver” improve your offer.

Subscribe to our latest news

Every morning information to remember about financial market.

Source link

Leave a Comment