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The chairman of Spanish bank BBVA has declared that the hostile bid for rival Sabadell is “unstoppable” and will have little difficulty overcoming regulatory and political challenges.
The biggest European banking deal of the year is entering a crucial phase, with BBVA shareholders set to vote at an extraordinary meeting next week on raising additional capital to support the €10 billion all-share offer.
In an interview with the Financial Times, BBVA CEO Carlos Torres said Sabadell’s board was wrong to reject his bank’s friendly approach last month. “They say it’s about the economy… but I think they’re fooling themselves,” he said.
“They have that confidence and they believe they can continue to create value and maybe they see the integration with BBVA as a cold shower. I can sympathize with that, but it is not the right answer.”
He added: “This is a great offer. It’s a knockout offer. It is an incredibly rich offering.”
If the vote on raising additional capital by BBVA is approved, the bank will have to wait for European and Spanish regulators to give the green light to the takeover bid or demand measures to address competition concerns.
The next step would be to open the takeover bid to Sabadell shareholders, who would need to sell more than 50 percent of the smaller lender’s shares for BBVA to succeed.
The final step in the process brings complications: Spain’s Socialist-led government must rule on the merger of the two entities and has said it will veto the tie-up, even though BBVA already owns Sabadell. Even if BBVA wins, the deal is unlikely to close before mid-2025.
Torres first approached Josep Oliu, his counterpart at Sabadell, in mid-April and the offer was based on a 50 percent premium to Sabadell’s share price at the time. Since then, Sabadell’s shares have risen 28 percent and BBVA’s have fallen 6 percent, reducing the premium to just 7 percent.
The BBVA chairman said the rise in Sabadell’s share price reflected investors’ expectations that his bank’s bid would succeed.
However, a person close to Sabadell said the lengthy bidding process made that outcome uncertain.
“The overwhelming opposition to the transaction from almost every stakeholder group shows that this is far from a done deal,” she added. “The impact of each transaction on competition in an already concentrated market in Spain is a priority for stakeholders.”
Proxy advisors ISS, Glass Lewis, Corporance and Pirc all recommended BBVA investors vote in favor of the capital increase at next Friday’s EGM, although they all qualified their support by saying the hostile bid – a rare move in Spain – caused uncertainty around the deal. completed.
Torres said he had received support from BBVA shareholders for the acquisition, including investors who also had stakes in Sabadell. “The value of Sabadell depends entirely on the value of our offer,” he said
The next stage in the process would be for the European Central Bank and the Spanish market regulator to give their approval. This is expected as there are no solvency issues.
Spain’s antitrust watchdog must also give its opinion on the deal and Torres said he expected any changes requested for competitive reasons would be acceptable.
However, Spanish Economy Minister Carlos Cuerpo has cited competition issues as one of the government’s concerns, along with worries about employment, financial stability and even Spain’s “territorial cohesion”.
While the government has the final say on the merger, Torres said, “We are confident we can work together to address these concerns.”
“The transaction makes sense for Spain and for Europe,” he added, noting that only two of the world’s 20 largest banks by market capitalization were from Europe — HSBC and UBS — and neither was based in the EU.
“That’s why we’re pretty confident that this is an unstoppable train and that this is going to happen. Not only because it’s good for shareholders, but also for customers and society,” he said.