Regulator approves BBVA's hostile takeover bid for Sabadell bank

Spain's competition regulator CNMC has approved BBVA's hostile takeover bid for Banco Sabadell on Wednesday evening. 

After nearly a year of analysis, the competition authority gave the green light after a meeting, attaching certain conditions.

The CNMC's five-member Competition Chamber reconvened on Wednesday after a meeting on Monday was interrupted due to the widespread blackout.

The approval means bank BBVA can approach Sabadell shareholders with greater confidence, and they may now sweeten the deal to seal the acquisition, according to analysts the Catalan News Agency (ACN) spoke to before the regulator gave its approval.

Bilbao-based banking giant BBVA announced its intention to acquire Catalan bank Sabadell exactly one year ago.

A week later, Sabadell's board unanimously rejected the offer, arguing that it significantly undervalued the bank’s strategy and future as an independent entity.

On May 9, BBVA bypassed the board and took the proposal directly to shareholders, an aggressive move that was immediately met with resistance from business groups, unions, and political leaders.

One year on from the bid, the CNMC approval opens the door to a possible shareholder vote on the takeover bid, possibly towards the end of the summer. 

The regulator's decision means that the Spanish government is the next authority forced to decide on the financial operation. However, the cabinet can impose extra conditions on BBVA's takeover bid.

The Spanish finance ministry will now have two weeks to analyze the situation before submitting it to the weekly cabinet meeting. Once that happens, the executive would have 30 days to decide on their position.

For the hostile takeover to be concluded, over half of Banc Sabadell shareholders should approve it in a vote expected, if everything goes as planned, before summer.

Sweetening the deal

BBVA is currently offering one of its shares for every 5.3456 Sabadell shares, plus a cash payment of €0.70. The offer has been slightly adjusted since it was first made, but with Sabadell's stock price outperforming BBVA's, the current deal holds little appeal for Sabadell shareholders, who ultimately have the final say.

BBVA chair Carlos Torres has always denied that an improved offer will be forthcoming, but Dotras disagrees. "I think BBVA is saving something for the last moment," she says.