Source: Sharecast
The Catalan lender said in a filing that the proposal “significantly undervalues Sabadell’s business” and is “riddled with risks and uncertainties”.
It warned that accepting BBVA’s terms of one new BBVA share plus 70 euro cents in cash for every 5.5483 Sabadell shares would expose investors to the “volatility” of BBVA’s large emerging market operations, particularly in Mexico and Turkey, which generate around two-thirds of its profits.
Sabadell argued that BBVA’s estimates of €900m in cost synergies by 2029 were “over-optimistic” and potentially “incompatible” with restrictions imposed by the Spanish government, which has blocked any formal merger between the two banks for at least three years.
The board cautioned that the constraints created a “risk of loss of revenue or dis-synergies, together with the lack of certainty about the execution of the proposed merger”.
Its recommendation came after BBVA formally launched its tender offer on Monday, giving Sabadell shareholders until 7 October to decide.
A successful deal would create Spain’s second-largest bank by domestic assets, behind CaixaBank and ahead of Santander.
David Martínez Guzmán, a Mexican billionaire who owns about 3.9% of Sabadell through Fintech Europe and sits on its board, abstained from signing the recommendation but said the bid was strategically sound at a higher price.
“The transaction presented by BBVA is the right strategy for both institutions, although at a price that currently makes it unfeasible,” he said.
BBVA, led by chair Carlos Torres, has ruled out sweetening its offer, despite Sabadell’s market value now exceeding the bid and some analysts expecting a higher price.
If BBVA fails to secure at least 50% shareholder acceptance, Spanish takeover rules could force it to launch an alternative cash offer, potentially requiring a capital increase.
Reporting by Josh White for Sharecast.com.
