Banco Sabadell refused merger proposal with BBVA – Banking & Finance

The board of directors of Banco Sabadell rejected this Monday the merger proposal launched last week by BBVA, the financial institution said in a statement to the National Securities Market Commission (CNMV).

“The board considers that the proposal significantly undervalues ​​Banco Sabadell’s project and its growth prospects as an independent entity”, states the document.

The bank’s management, made up of 14 members and chaired by Josep Oliu, met today to evaluate the Basque rival’s proposal. “The board of directors has full confidence in Banco Sabadell’s growth strategy and financial objectives and is of the opinion that Banco Sabadell’s strategy as an independent entity will generate greater value for its shareholders”, they add. This is the second time that Sabadell has rejected BBVA’s “advances”. The first attempt was made in 2020.

It was on April 30, last Tuesday, that BBVA confirmed that it had sent a letter to Sabadell to begin talks for a possible merger, having led the Catalan bank’s shares to rise that day.

The proposal valued Sabadell at almost 11.5 billion euros. BBVA intended to carry out the deal by paying a new share representing part of the Basque bank’s share capital, for every 4.83 Sabadell shares. After calculating this ratio, and taking into account the closing prices of both institutions on April 29, this represented a premium of 30% and a value 4.5 times higher than the merger proposed four years ago.

Even so, one of the reasons given by the Catalan bank for rejecting the proposal was “the significant drop and volatility in BBVA’s share price in recent days, which generates additional uncertainty about the value of the proposal”. The institution’s securities have depreciated 9.72% since the offer was announced.

BBVA also offered three positions on the banking institution’s board of directors and a vice-presidency. According to the proposed exchange, current Sabadell shareholders would end up owning 16% of BBVA shares.

The Basque bank also guaranteed that one of the operational headquarters of the new entity would be in Catalonia, allowing it to maintain Sabadell’s regional DNA.