Spanish bank BBVA has launched a hostile offer for Banco Sabadell after the board of its domestic rival rejected an approach.
BBVA took its all-share offer directly to Sabadell’s shareholders on Thursday, less than a week after the target’s board said the bid had “significantly undervalued” the bank and its prospects.
The initial takeover offer, made last week, valued Sabadell at €12bn, but that price has since fallen as BBVA shares have declined.
The increasingly fractious spat between the banks is rare in Spain, a country unaccustomed to hostile bids. The country has seen more than 20 in the past three decades but most have failed.
BBVA’s decision to go hostile triggered a sharp rebuke from the Spanish government.
“The government rejects BBVA’s decision to launch a hostile takeover bid for Sabadell, both in form and in substance,” said a government official, warning of “potentially damaging effects on the Spanish financial system”.
Shares in BBVA fell a further 5 per cent in early trading on Thursday, a drop that left the offer valuing each Sabadell share at €2.02 and the bank at €10.94bn. Shares in Sabadell climbed 4.5 per cent.
Under the terms of the bid, BBVA is offering one newly issued share for every 4.83 Sabadell shares.
“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,” BBVA chair Carlos Torres said, as the lender launched its tender offer for Sabadell shares.
Sabadell board’s rejected the bid on Monday, saying it “significantly undervalued” its growth prospects.
Sabadell on Wednesday took the unusual step of publishing a private email sent on Sunday by Torres to its chair Josep Oliu in which BBVA indicated it would not increase its bid. “I consider that it is very important that your board of directors knows that BBVA has no room to improve its economic terms,” Torres wrote.
The deal would bring together the third- and fourth-largest banks in the Spanish market, creating a lender with the biggest domestic balance sheet. Sabadell also owns UK lender TSB.
The two banks attempted to strike a deal four years ago at the height of the pandemic, but merger talks broke down after two weeks following disagreements over pricing.
