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Rare hostile takeover bid in European banking sector shocked markets – NBC Los Angeles

  • Spanish bank BBVA surprised markets after announcing a rare hostile takeover bid for domestic rival Banco Sabadell.
  • This comes shortly after a separate €12 billion ($12.87 billion) offer from BBVA to Sabadell’s board was rejected earlier in the week.
  • David Benamou, chief investment officer at Axiom, said BBVA’s takeover offer for Sabadell reflected “a very strange situation indeed”.
A logo outside the offices of Banco Sabadell SA, in the Banc Sabadell tower in Barcelona, ​​Spain, Wednesday May 1, 2024.
Bloomberg | Bloomberg | Getty Images

A logo outside the offices of Banco Sabadell SA, in the Banc Sabadell tower in Barcelona, ​​Spain, Wednesday May 1, 2024.

Spanish bank BBVA surprised markets on Thursday after announcing a rare hostile takeover bid for domestic rival Banco Sabadell, with one investment firm calling the situation “very strange.”

The move comes shortly after a separate 12 billion euro ($12.87 billion) buyout offer from BBVA to Sabadell’s board was rejected earlier in the week.

The board said Monday that BBVA’s initial offer “significantly understates” the bank’s growth prospects, adding that its standalone strategy would create superior value. She reiterated that position Thursday when BBVA presented its stock offer directly to the bank’s shareholders.

BBVA said its takeover offer carries the same financial conditions as the merger proposed to Sabadell’s board of directors. He called the proposal – which, if successful, would create Spain’s second largest financial institution – “extraordinarily attractive”.

“We are presenting Banco Sabadell shareholders with an extraordinarily attractive offer to create a larger bank in one of our most important markets,” BBVA President Carlos Torres Vila said in a statement.

“Together we will have a greater positive impact in the geographies where we operate, with additional lending capacity of €5 billion per year in Spain.”

Shares in BBVA fell 6% around midday London time on Thursday, while Sabadell’s share price rose more than 3%.

‘Not so easy’

Hostile takeover bids are not common in the European banking sector and BBVA’s decision to proceed in this manner surprised many.

Carlo Messina, CEO of Italy’s largest bank Intesa Sanpaolo, told CNBC on Wednesday that there are significant challenges to national consolidation within the region’s banking sector.

He said it was difficult to achieve a “friendly transaction” in the current market environment, while launching a hostile takeover bid was also not “so easy to do.”

David Benamou, chief investment officer at Axiom, said BBVA’s bid for Sabadell reflected “a really, really strange situation.”

Speaking to CNBC’s “Squawk Box Europe” on Thursday, Benamou said the proposed offer “made sense” from the perspective of Sabadell shareholders and, in his view, was likely to succeed. He cited the fact that BBVA’s offer represents a 30% premium to the two banks’ closing prices on April 29.

“This echoes recent discussions in Switzerland with the consolidation of Credit Suisse by UBS and all the concerns about financial stability,” he added.

“I think executing the transaction could be quite difficult, although you could argue that it’s the same geographic area, the culture is theoretically very close, as opposed to a cross-border merger.”

Benamou said a growing trend toward consolidation among European banks made sense, particularly because many regional lenders are “very small” compared to their U.S. peers.

Signage outside a Banco Bilbao Vizcaya Argentaria SA (BBVA), right, and a Banco Sabadell SA, left, bank branch in Barcelona, ​​Spain, Wednesday, May 1, 2024.
Bloomberg | Bloomberg | Getty Images

Signage outside a Banco Bilbao Vizcaya Argentaria SA (BBVA), right, and a Banco Sabadell SA, left, bank branch in Barcelona, ​​Spain, Wednesday, May 1, 2024.

The Spanish Economy Ministry said in a statement that the government rejected BBVA’s hostile takeover bid for Sabadell, “both in form and in substance.”

The ministry also warned that the proposed deal “introduces potentially harmful effects on the Spanish financial system.”