Sabadell shareholders take the floor

Since BBVA announced a hostile takeover bid for Banc Sabadell on May 9, 2024, the Valles-based bank has been taking steps to derail it, to the point that what initially seemed a plausible operation is now beginning to seem improbable. First, there was the return to Catalonia, then the harsh conditions imposed by the Spanish government on the merger, and this Wednesday, the practically unanimous shareholder approval of the sale of the British bank TSB to Santander for a price that could approach 3.4 billion euros.

This is a transaction with a double effect. On the one hand, it allows for a mega-dividend of 2.5 billion euros to be distributed among shareholders, at a rate of 50 cents per share (provided they do not subsequently agree to the takeover bid). On the other hand, it makes Sabadell a less attractive bank for BBVA, since one of the things that particularly interested the Basque bank was the possibility of establishing a foothold in the United Kingdom. For A or B, the takeover bid makes less sense for BBVA today than it did before Sabadell's two shareholder meetings.

Behind the scenes of this chess game that Josep Oliu and César González-Bueno have played against Carlos Torres is the conviction that Sabadell has a special idiosyncrasy, given to it by the fact that it is Catalan, but not only. Sometimes they try to sell the idea that in economics everything comes down to numbers, but the reality is often more complex. BBVA surely didn't calculate that its move would mobilize not only the Catalan political class, but the entire Catalan business community. And then it surely underestimated Catalan influence in the Moncloa Palace, just at a time when Pedro Sánchez depends on Catalan votes to stay in power.

But ultimately, it has also failed to appreciate the influence of small shareholders who, with their vote in favor of the sale of TSB, today also endorsed the strategy of resisting the takeover bid designed by Oliu. It is very difficult to see, in any company or financial institution, a unanimity like that seen today at Sabadell. 99.7% were in favor of both the sale and the dividend distribution.

All these events have also broken BBVA's internal unity, which publicly has not ruled out even withdrawing the takeover bid. The truth is that the Basque bank is at a crossroads and must decide which path to choose. Doing nothing is a strategy doomed to failure. Either it takes a leap forward and significantly raises the offer to shareholders, or it accepts the failure of the operation and withdraws the takeover bid before the erosion becomes too much.

Whatever the case, the vicissitudes of the takeover bid are proving one thing: no matter how difficult it may be, you can never give up on a battle. And if all Catalan political and economic players act in a coordinated manner, they have much more power than one might think. We'll have to wait a bit longer to know the final outcome, but the only thing that's clear is that today Catalonia is closer than yesterday to retaining a very important banking headquarters for its SME network.