BBVA to press ahead with Public Acquisition Offer for rival Sabadell

Spanish bank BBVA has decided to press ahead with its Public Acquisition Offer (PAO) in a hostile takeover bid for its rival Sabadell despite the Spanish government’s misgivings.

The bank led by Carlos Torres is looking at the operation after the Spanish government hardened its line against the takeover, including a prohibition on a merger for three years.

Sabadell has offices in both Porto and Lisbon.

“BBVA has decided not to pull out of its offer and therefore it remains current as planned under applicable regulations”, the bank said in a communiqué.

“The project will create immense value for the shareholders of both and represents a unique opportunity to build one of the most competitive and innovative banks in Europe”, said Carlos Torres in a communique published shortly after the decision.

Torres added, “Together we will be a more solid entity, with greater scale and a capacity to provide financing to companies and families by €5Bn annually, thereby contributing to the economic growth of our country.”

The Spanish Government has authorized BBVA to proceed with the hostile takeover bid for Sabadell. However, as announced last week, it has tightened the conditions for the €11Bn operation to move forward.

BBVA will have to keep Sabadell as a separate bank with autonomous management for at least three years, making it more difficult to achieve synergies estimated to be in the order of €850 million.