BBVA's $19 Billion Hostile Takeover Bid for Sabadell Falls Through — Update

By Elena Vardon

BARCELONA--BBVA failed in its attempt to take over Banco de Sabadell, after an all-stock hostile bid that valued its smaller rival at about 16.32 billion euros ($19.08 billion) fell short of the minimum threshold.

Shareholders representing just over a quarter of Sabadell's capital accepted BBVA's offer, Spain's market regulator said late Thursday. The regulator rendered the offer void as the number of Sabadell shares tendered to the bid didn't meet the 30% that was required for the deal to move forward, it said.

This draws to a close a hostile takeover bid that dragged on for nearly 18 months under which BBVA, Spain's second-biggest bank, sought control of Sabadell, the country's fourth-largest lender.

Analysts saw the fight for the future of Sabadell as a test case for consolidation among Europe's banks, which have seen their share prices surge over the past two years as higher profitability, bumper shareholder payouts and the prospect of dealmaking lured investors.

"This is not the result we expected or the one we would have hoped for, but it is the decision of the majority of Sabadell shareholders, and we accept it as such," BBVA Chair Carlos Torres told reporters, adding that the bank is now closing this chapter and looking forward.

BBVA swiftly announced that it would speed up shareholder returns and kick off a pending share buyback of around 1 billion euros later this month. BBVA said it would launch a significant additional stock-repurchase program after receiving approval from the European Central Bank to bring forward part of the capital distributions of its most recent business plan.

Shares in BBVA jumped 9.7% in European morning trade on Friday. The offer result "comes with some relief, not because the transaction was a bad one, but because the uncertainty overhanging both banks had lasted far too long" RBC Capital Markets analyst Benjamin Toms said. The outcome also removes the risk of having to launch a second offer in cash to win over the holdouts had the acceptance rate landed between 30% and 50%, a scenario that was expected by most market participants and would have had repercussions on BBVA's capital levels and distributions.

There is seemingly no clear inorganic path for BBVA to increase scale in its home market, but the bank has sufficient ammunition after the failed bid to leave a decent after-taste and reward shareholders for their patience, Jefferies analyst Inigo Vega wrote.

"It is with great satisfaction that we confirm that Banco Sabadell will continue independently and continue to serve its customers in the same way that it has done for over 144 years," said Josep Oliu, Torres' counterpart. The Catalan bank will press on with the execution of its strategic plan and return money to shareholders.

Sabadell's shares were under pressure in early exchanges, trading 6% lower, though some expect its capital distribution plans to support the shares and reverse this initial weakness in the near term.

Banco Bilbao Vizcaya Argentaria--as the lender is formally known--aimed to create a heavyweight that would have ranked as Europe's third-largest bank by market value, after HSBC Holdings and Banco Santander.

The takeover attempt for Sabadell sought to bolster BBVA's presence in its home market to balance out its exposure to emerging markets such as Mexico and Turkey where it makes the bulk of its business. The deal would have complemented BBVA's heft in blue-chip corporate and retail banking with Sabadell's small and mid-sized business client base and footprint in eastern Spain.

BBVA embarked on a pursuit for Sabadell in early May 2024, reviving a first attempt in 2020 that failed due to disagreements over price. But the renewed approach quickly turned hostile. Sabadell's management fiercely defended the independence of the lender, which is based in its namesake town just outside Barcelona.

The proposed deal sparked opposition from politicians, business groups and unions but was cleared by Spain's antitrust regulator with some mitigating measures and got the green light from the ECB.

The Spanish government imposed a further hurdle--if the deal went through, BBVA and Sabadell would have had to remain legally separate and operate in parallel under the same corporate umbrella for at least three years. This would have delayed the extraction of cost savings that are usually a large part of the rationale to pursue a merger.

But BBVA clinched on, even after Sabadell agreed to sell its U.K. unit TSB to Santander in a 2.65 billion-pound ($3.65 billion) cash deal in what was seen as a maneuver to fend off the bid and pledged to hand proceeds to shareholders through extraordinary dividends.

In early September, BBVA formally put the offer to Sabadell shareholders. Halfway through the acceptance period, BBVA sweetened the bid by roughly a tenth, improving the exchange ratio to 1 BBVA share for every 4.8376 Sabadell shares. Sabadell's management still argued that the improved terms undervalued the bank and its growth prospects.

Based on Thursday's closing prices, the latest offer valued Sabadell at 16.32 billion euros, which represented a 0.6% premium to its market capitalization--a fraction of the premium BBVA originally offered, which quickly shrunk as Sabadell shares rallied.

In recent weeks, both sides engaged in a charm offensive to sway shareholders, a large part of which are retail investors, and hashed out their arguments publicly ahead of the close of the tender period on Oct. 10.

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

October 17, 2025 05:12 ET (09:12 GMT)