BBVA maintains its takeover bid for Sabadell despite the conditions imposed by the Spanish government.

MadridBBVA's hostile takeover bid for Banc Sabadell is taking another step closer to a conclusion. The Bilbao-based bank has decided to continue the offer despite the Spanish government's condition that the two entities remain separate for three to five years. This means that even if the takeover bid is successful (BBVA and Sabadell would be integrated), the subsequent merger would not materialize until later.

The most direct consequence of the condition imposed a week ago by Pedro Sánchez's executive is the reduction of synergies or cost savings that BBVA anticipated with the operation. something you've been analyzing these past few days"It will delay the realization of some of the estimated synergies," the bank acknowledged in a press release on Monday afternoon. However, it has not yet provided further details on the impact. Despite the thorn in the side of the government's decision, the bank chaired by Carlos Torres is not throwing in the towel and opting to maintain the takeover bid: "The project creates enormous value for the shareholders of both entities and represents a unique opportunity to build one of the most competitive and innovative banks in Europe," BBVA maintains.

BBVA has estimated the cost savings from the merger with Sabadell at €850 million (the acquiring bank typically lays off staff, closes branches, or combines technological capabilities to avoid duplication). The Spanish government's position complicates, among other things, the layoffs linked to the merger, and the €300 million in personal savings are diluted. Under competition conditions, there have been two opinions in the sector. As explained by ARASome have stopped seeing "economic rationality" in the operation, while others have indicated that the central government's position is not so harsh. In the latter case, it is argued that a merger following a takeover bid typically takes time and that BBVA's ability to consolidate its results with those of Sabadell is not affected. This would allow it to reduce its exposure to Turkey and Mexico, much more volatile markets, in favor of Spain and the United Kingdom, where Banco Sabadell is present. In fact, some reports have indicated that there were disagreements within BBVA's board of directors. Sources at the Bilbao bank indicate that "the decision to move forward has the full and unanimous support of the board of directors."

Waiting for TSB

In any case, BBVA hasn't only had to worry about whether the Spanish government's position significantly affected its plans. They confirmed to ARA last Friday that the two finalists for the possible purchase of this business are Banco Santander and Barclays, and the board of directors of the Valles-based bank is scheduled to meet this Tuesday to analyze them. The takeover bid.

Specifically, the bank chaired by Ana Botín has submitted a binding offer for TSB for 2.3 billion pounds (approximately 2.7 billion euros), according to the Reuters news agency this Monday. They assume it will be higher than the price at which Sabadell bought TSB ten years ago (2.3 billion euros): "Today the market has a good valuation of TSB, and Banco Sabadell could take advantage of this to remunerate shareholders," these sources explained to ARA about how a sale is going. They are trying to defend themselves, precisely, against BBVA's takeover bid. The Catalan bank, however, has denied this and has dismissed the idea that this was a "poison pill", that is, that it seeks to destroy Sabadell's value so that another offer, in this case the BBVA takeover bid, would be derailed by BK_SLT_LNA~ Latest

With Monday's breakthrough, the bank chaired by Carlos Torres must now clear the takeover bid prospectus with the Spanish National Securities Market Commission (CNMV), the Spanish stock market regulator. This is expected to be a quick process because the financial institution has been working on it for some time. The bank indicates that this document, essential for Sabadell shareholders when voting, will be ready in the "coming weeks." Specifically, the timeframe has been between two and three weeks. The CNMV itself expects it to be a "rapid" process..

Once the prospectus is published, BBVA must request the opening of the acceptance period, which is when Sabadell shareholders will have to decide whether or not to sell their shares. This period will extend until September because BBVA wants to avoid the month of August. Five days before its end, BBVA could improve the offer to try to ensure that more than half of Sabadell shareholders sell their shares and the takeover bid is successful.