Spain’s second-largest bank is set to become Europe’s third-largest lender by market value, behind HSBC and Santander.
BBVA increased its hostile takeover bid for Banco Sabadell by 10%, to 17 billion euros (about $20 billion). The revised allshare proposal – one BBVA share for every 4.8376 Sabadell shares – would eliminate the previous cash component. The positive side is that if more than half of Sabadell’s shareholders accept the deal, they will not have to pay capital gains tax immediately.
With the approval of the Spanish National Securities Market Commission, the offer now enters a decisive stage ahead of the October 10 shareholder deadline and opens the door for Sabadell investors to consider the offer.
Under the updated terms, shareholders of the Catalan bank would hold a 15.3% stake in the merged entity.
However, BBVA’s offer continues to provoke strong reactions. Sabadell’s board unanimously recommended shareholders reject the offer, arguing that even the improved offer undervalues the bank, particularly given recent gains from divestitures of businesses such as British retail bank TSB.
Sabadell CEO César González-Bueno denounced the offer as “worse than the original”, saying it does not include a sufficient premium and could expose shareholders to tax and legal risks if less than 50% of them accept it.
Investors are divided. Major asset managers such as BlackRock, Vanguard and Norges are seen as critical to the outcome, but their positions remain unclear. Market observers warn that the 10% increase may not be enough to convince large shareholders already skeptical of regulatory constraints and synergies.
Additionally, the Spanish government has required that, even in the event of an acquisition, BBVA and Sabadell remain separate legal entities for at least three years – a requirement that some see as limiting the viability of the deal. The European Commission has warned Madrid not to obstruct a legal takeover bid with disproportionate conditions that could breach EU rules.
If successful, the takeover would elevate BBVA to the top tier of European banking, underscoring a long-awaited wave of consolidation in a sector often seen as too fragmented to compete on a global scale. But as the October deadline approaches, it is still far from certain that the offer will overcome political resistance, regulatory constraints and shareholder hesitation.