Opinion

Postmortem of the hostile takeover bid

The corporate headquarters of Banc Sabadell in Sant Cugat del Vallès, in an archive image.
18/10/2025
2 min

The outcome of BBVA's takeover bid for Banc de Sabadell was unexpected, both by analysts and by the presidents of both banks, Carlos Torres and Josep Oliu. It is reminiscent of the failure of José Ángel Sánchez Asiaín, president of Banco de Bilbao, when his hostile takeover bid for Banesto failed in 1987. BBVA was left with only a 25% or so acceptance rate. It was expected that the takeover bid by Sabadell shareholders would range between 30% and 50%, forcing BBVA to consider whether to proceed, and there was speculation about whether the price would rise (which had to be "fair" and approved by the CNMV).

Minority shareholders, and many Sabadell clients, with 41% of the shares, showed very little participation in the takeover bid. More surprisingly, institutional funds, with 30% of the shares, and passive funds (which track an index) with 20%, also failed to respond as expected. There will be time to explain the reasons for the failure and the consequences, both for BBVA and Sabadell. For the former, it was the need to establish a stronger foothold in Europe, and for the latter, to gain scale with domestic or European operations. However, some elements can already be identified:

  1. Conducting a hostile takeover bid is complicated, especially if there is strong political and business opposition in key segments where banks do business. The Spanish government imposed, as a condition for approving the transaction, in order to safeguard the public interest, that Sabadell remain autonomous for at least three years, extendable to five. The merger of the entities and the resulting synergies were therefore postponed. Furthermore, the institutional funds may have taken into account the opposition to the transaction from the Spanish, Catalan, and Valencian governments (of different political persuasions). The close relationship between Sabadell's minority shareholders and clients, important in the business fabric of Catalonia, Valencia, and other countries, did the rest.
  2. The dynamics of Sabadell shareholders' potential decisions regarding BBVA's offer were not easy to predict because of a coordination problem that resulted in strategic uncertainty. A significant shareholder inclined to accept the offer faced a dilemma. If they accepted immediately, they would help the takeover bid overcome the 30% threshold, but they would potentially miss out on an improvement in a second offer to reach 50%. If they did not accept immediately, they would then have the option to improve only if the 30% threshold was exceeded. That's why BBVA insisted that there would be no price improvement in the second round or that the 50% threshold would be exceeded in the first round. For a small shareholder, there was fiscal uncertainty surrounding the acceptance of the takeover bid, depending on whether the 30% or 50% threshold was exceeded.
  3. BBVA's massive advertising campaign to attract minority shareholders hasn't worked. One day we'll know the cost of the two massive, opposing advertising campaigns, which certainly benefited the media, but we must ask ourselves whether it was the best use of the investment.
  4. The process has been too long. Both banks spent a year and a half concentrating their efforts on the takeover bid, a distortion that took too long. Takeover bid regulations will be reviewed.
  5. The Spanish government's intervention in the process following the CNMC's approval has been controversial and has drawn the attention of the European Commission. The regulations are likely to be revised. Competition regulations have repeatedly come into conflict with governments' ability to allow or oppose corporate mergers due to issues of public interest, which are not easy for entities considering a merger to define and anticipate.

For the time being, an important financial decision-making center remains in Catalonia.

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