Spanish bank BBVA shares hit highest in 18 years after takeover bid for rival collapses

BBVA had pursued takeover of Sabadell for 18 months

Shares in Spanish bank BBVA soared to the highest level in 18 years after its takeover bid for rival Banco Sabadell collapsed, prompting investors back after a year and a half of uncertainty and the prospect of higher payouts. Picture: AP Photo/Natacha Pisarenko

Shares in Spanish bank BBVA soared to the highest level in 18 years after its takeover bid for rival Banco Sabadell collapsed, prompting investors back after a year and a half of uncertainty and the prospect of higher payouts.

“The announcement that BBVA has failed in its attempted takeover of Sabadell comes with some relief, not because the transaction was a bad one, but because the uncertainty overhanging both banks had lasted far too long,” RBC analyst Benjamin Toms wrote in a note.

BBVA shares rose as much as 11% on the news, to the highest since 2007, while Sabadell fell 7.7%.

Sabadell investors tendered just 25.47% of voting rights, according to a statement from the Spanish regulator CNMV on Thursday. That’s below the 30% threshold BBVA would have needed to proceed with the takeover.

For KBW analyst Hugo Cruz, the bid’s failure can be positive for both lenders and allows them to move on and focus on their respective businesses. BBVA has already said it will start a “significant” additional share buyback programme.

BBVA has soared 75% since the start of the year, among the best-performing European lenders, while Sabadell is up 59%, which compares with a 41% advance of the banking sector in the region.

Citigroup aanalyst Borja Ramirez expected BBVA shares to react positively after the removal of takeover uncertainty. He also anticipated a slide in Sabadell shares following selling pressure from merger arbitrage funds and other investors.

BBVA was offering one of its shares for every 4.8376 share of Sabadell, which valued the lender at roughly €16.3bn at Thursday’s close, compared with a market value of €16.2bn.

BBVA chairman Carlos Torres made clear he doesn’t intend to resign over his failure to buy rival Sabadell despite doggedly pursuing the deal for a year and a half.

“I will be heading the bank as long as shareholders and the board want me to be doing so,” Mr Torres said in an interview with Bloomberg TV on Friday following the deal collapse the previous day. “I will continue, there is no doubt about that.” 

Mr Torres also sought to show that the end to the bid may not be bad news since it removes “all restrictions we had on distributions, and our shareholders will see the immediate benefit.” Mr Torres said he will be “squarely” focused on investor payouts and “not M&A” going forward.

Bloomberg