BBVA, one of Spain's largest banks, has failed in its €17 billion bid to acquire smaller rival Sabadell. The hostile takeover attempt concluded with only 25.47% of Sabadell shareholders backing the offer, significantly below the 50% threshold BBVA needed for the deal to pass. This outcome marks a major setback for BBVA's leadership and ends a contentious period in Spanish banking.
Key Takeaways
- BBVA's €17 billion takeover bid for Sabadell failed to secure sufficient shareholder support.
- Only 25.47% of Sabadell's voting rights backed the offer, far short of the required 50%.
- The Spanish government and local political entities, particularly in Catalonia, opposed the merger.
- This marks the second unsuccessful attempt by BBVA Chair Carlos Torres to acquire Sabadell.
- The failure highlights challenges in European banking consolidation, echoing similar issues in Italy and Germany.
BBVA's Unsuccessful Acquisition Attempt
The bid's failure represents a significant defeat for BBVA Chairman Carlos Torres. Torres had previously attempted a friendly takeover of Sabadell in 2020, which also did not succeed. Following another failed friendly approach in April 2024, BBVA launched this hostile bid in May 2024. The latest offer did not gather the necessary support from Sabadell's shareholders.
According to BBVA's statements, if the proposal had received backing over 30%, the bank could have launched a second, potentially more aggressive, offer. However, the 25.47% shareholder approval rate fell short of even this lower threshold, effectively ending BBVA's pursuit of Sabadell for now.
"Looking ahead, our strategic plan and financial objectives for the 2025-2028 period will keep us at the forefront of European banking in terms of growth and profitability," BBVA Chair Carlos Torres stated, reacting to the bid's failure.
Fact Box
- Offer Value: Approximately €17 billion.
- Shareholder Support: Only 25.47% of Sabadell voting rights backed the offer.
- Required Support: BBVA needed 50% for the deal to pass outright.
- Previous Attempt: BBVA made an unsuccessful bid for Sabadell in 2020.
- Timeline: Hostile bid launched in May 2024, following a failed friendly attempt in April 2024.
Political and Regional Opposition to the Merger
BBVA's takeover offensive faced considerable backlash from political, business, and social groups within Spain. This opposition was particularly strong in Catalonia, the region where Sabadell was originally founded. Catalonia has a distinct nationalist identity and a history of independence movements, making the potential acquisition of a locally rooted bank a sensitive issue.
Banco Sabadell had moved its headquarters to Alicante in 2017 due to political uncertainty surrounding Catalonia's independence bid. However, amid BBVA's takeover attempt earlier this year, Sabadell's board decided to move its headquarters back to Catalonia. This move was seen by many as a strategic decision to reaffirm its regional ties and potentially garner local support against the merger.
Background Information
Sabadell's roots are deeply embedded in Catalonia, a region with a strong sense of cultural and political autonomy. The bank's decision to return its headquarters to Catalonia during BBVA's hostile bid highlights the significance of local identity in major corporate decisions, especially in politically sensitive regions. This context played a role in the widespread opposition to the merger.
Government Concerns and Broader European Trends
The Spanish government also expressed strong opposition to the proposed merger. Officials argued that consolidating two major banks could significantly threaten competition within the Spanish banking sector. This, they believed, would ultimately harm consumers by potentially leading to fewer choices and higher fees.
The state had even placed conditions on the acquisition, stating that if the deal proceeded, BBVA would be blocked from fully merging with Sabadell for at least three years. These conditions reflected a clear stance against unchecked banking consolidation. Concerns also mounted over potential job losses that could result from such a large merger, adding another layer of opposition.
Banking Consolidation in Europe
Despite these concerns, proponents of banking consolidation argue for its advantages in Europe. They suggest that creating larger banking powerhouses could better position eurozone lenders to invest in innovation and compete on a global scale. Mergers can also allow banks to combine expertise, potentially benefiting consumers if market competition remains healthy.
However, Spain is not the only European nation where major banking takeovers are facing difficulties. For example, Italian lender UniCredit withdrew its offer to buy smaller rival Banco BPM in July, following opposition from the Italian government. UniCredit is also reportedly bidding for German lender Commerzbank, but Commerzbank's board and German politicians have strongly opposed that deal. These instances indicate a broader trend of resistance to large-scale banking mergers across the continent.
- Spain: Government expressed concerns over competition and consumer impact.
- Italy: UniCredit withdrew bid for Banco BPM due to government opposition.
- Germany: Commerzbank's board and politicians oppose UniCredit's bid.
Following the news, BBVA announced a significant share buyback program and an interim dividend, measures likely aimed at reassuring investors about the bank's future profitability and strategic direction despite the failed acquisition.
