BBVA, Spain’s second-largest bank, has submitted a hostile takeover bid for Banco de Sabadell SA. Sabadell’s board has rejected this offer, and now it will be up to Sabadell’s shareholders to decide the bid’s fate.
The proposed deal comes with an enticing 30% premium over Sabadell’s share price, equating to €2.26 per share. If the merger between these two banks becomes a reality, it is estimated that they could achieve an impressive €850 million in pre-tax annual cost savings. It is important to note that there will be an initial pre-tax restructuring charge of €1.45 billion.
Should the merger be approved, the combined entity of BBVA and Sabadell would hold a significant 19% share in loans. This will position them closely behind the current market leaders, CaixaBank with 23.4% and Santander with 17.5%.
Sabadell has a higher exposure to SMEs compared to BBVA, which offers a more robust platform for any Spanish retail business in the long run.
