BBVA’s Takeover Bid for Banco Sabadell Faces Government Hurdles Amid TSB Sale to Santander and €2.5 Billion Dividend

The proposed takeover bid (OPA) by BBVA for Banco Sabadell has encountered multiple challenges and uncertainties following government intervention and recent strategic moves by Sabadell. The Spanish government temporarily suspended trading of both banks' shares to prevent asymmetric information and volatility before a ministerial council meeting. Subsequently, the government imposed new conditions on the BBVA bid, citing concerns about the impact on small and medium-sized enterprises and social security accounts, which has led to division among analysts regarding the deal's viability. Foment declared the BBVA offer effectively nullified due to these governmental conditions. Sabadell's management and minority shareholders have expressed skepticism about the bid, with Sabadell's CEO González-Bueno stating that the offer lacks sense and that BBVA must recalculate expected synergies. Sabadell has also initiated the sale of its UK unit, TSB, to Santander for nearly $4 billion, a move that complicates BBVA's unsolicited takeover attempt. The bank plans to distribute an extraordinary dividend of €2.5 billion to shareholders from the TSB sale proceeds, which Sabadell warns will be irreversible once approved at an extraordinary general meeting. BBVA is permitted to issue a supplementary prospectus for its takeover offer once the TSB sale is approved. BlackRock has increased its stake in Sabadell following the government's ruling. Analysts suggest BBVA needs to improve its offer price, which is currently viewed as insufficient, especially after the TSB sale. The situation remains fluid, with legal challenges and shareholder decisions expected to shape the outcome of the BBVA-Sabadell merger attempt.