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Bank merger on the horizon: BBVA granted approval to acquire Banco Sabadell, marking a significant move in the Spanish banking sector.

Banco Sabadell, a Spanish bank, has been encountering persistent efforts by the towering financier Banco Bilbao Vizcaya Argentaria (BBVA) since the previous year, seeking to gain control.

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Giant Spanish bank approved to acquire Banco Sabadell, with merger imminent for BBVA
Giant Spanish bank approved to acquire Banco Sabadell, with merger imminent for BBVA

Bank merger on the horizon: BBVA granted approval to acquire Banco Sabadell, marking a significant move in the Spanish banking sector.

The Spanish Securities and Exchange Commission (CNMV) has authorised Banco Bilbao Vizcaya Argentaria (BBVA) to proceed with its takeover bid for Banco de Sabadell, as announced in a statement issued by the CNMV on September 8, 2024.

The takeover bid, filed on May 24, 2024, is conditional on the acceptance of a minimum number of shares representing more than half of the voting rights of Banco Sabadell, excluding treasury shares. If successful, this merger will create a "European leader in growth and profitability," according to BBVA.

BBVA's proposal includes one newly issued BBVA share plus a cash payment of €0.70 for each Banco Sabadell share. BBVA claims that this offer incorporates a premium clearly higher than that of recent similar transactions in Europe. Furthermore, the offer represents Banco Sabadell's best valuation in more than a decade, according to BBVA.

Banco Sabadell, led by CEO José Oliu, has been focusing on boosting returns to its shareholders. In fact, the bank has announced a strategic plan to deliver €6.3 billion of returns over the next three years. Recently, Banco Sabadell has sold its British subsidiary TSB.

BBVA's Chair, Carlos Torres Vila, has promised Banco Sabadell shareholders would obtain earnings per share 25% higher following the merger than with a standalone Banco Sabadell. BBVA now has 30 days, beginning on September 8, to get enough Banco Sabadell shareholders to accept their proposal.

After the takeover bid was authorised, José Oliu announced that Banco Sabadell will proceed with a strategic review to explore all options to maximise shareholder value. This ruling marks the conclusion of the long-standing efforts by BBVA to buy up its competitor.

It's worth noting that BBVA's and Banco Sabadell's share prices were up 0.2% at noon in Europe after the ruling. The merger of the two banks is expected to create a significant player in the European banking sector.

For more information about the takeover bid, investors can visit BBVA's dedicated website.

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