BBVA Bid To Become Banking Powerhouse Comes Under Fire

Spain’s second-largest bank, Madrid based, BBVA announced today a 12.23 billion euro hostile takeover bid for smaller rival Banco Sabadell despite opposition from the government who vowed to block the move.

The surprise announcement, immediately after Sabadell’s board rejected a bid on the same terms earlier this week will now go directly to the shareholders in an extraordinary meeting.

The Spanish government have said today that they are opposed to the hostile takeover bid launched by BBVA bank for its smaller rival Sabadell, saying the state would have the final say in the operation.

“The operation will create one of the best banks in Europe,” BBVA said in a statement.

BBVA aims to create a lender with more than 100 million customers globally and assets exceeding 1 trillion euros – second only to BBVA’s long-time rival Santander.

The merger will allow BBVA  to rebalance its business towards Spain and reduce its reliance on Mexico, its main market.

But Prime Minister Pedro Sánchez’s leftist government swiftly came out against the move, as did the regional government of Catalonia where Sabadell was born and where it has a strong presence.

Labour Minister Yolanda Díaz said it was against Spain’s “interests” because it “would destroy many jobs”.

Economy Minister Carlos Cuerpo warned the government “will have the last word when it comes to authorising the operation” which he said would be “potentially damaging”..

The proposed takeover would be carried out under same conditions as the initial approach — an exchange of one new BBVA share for every 4.83 Sabadell shares, a 30-percent premium over the April 29th closing price of both banks, BBVA said.

“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 Vila said in the statement.

A takeover would create a banking powerhouse capable of competing with Santander – Spain’s leading bank – as well as with European giants such as  Bank, HSBC and BNP Paribas.

BBVA, which also has operations in Mexico, Argentina and Turkey, is Spain’s second-largest banking group in terms of capitalisation and has 74.1 million customers.

Sabadell operates in 14 countries and has nearly 20 million customers.



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