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A hostile takeover by BBVA for Sabadell. Spain's number two bank, chaired by Carlos Torres, which tried to buy the fifth largest bank, Banco de Sabadell chaired by Josep Oliu, through a friendly merger proposal which was rebuffed, has now decided to go to the market and present an offer to its shareholders. The board of directors of the Basque-origin BBVA decided this Wednesday afternoon to launch an offer for 100% of the Catalan bank's shares, at the same price as the merger offer it made on April 30th, despite the opposition of the Sabadell board.

After days of tense back and forth between the two financial institutions, the move made by the larger bank was expected, and it has not wasted any time in acting. Thus, the Spanish banking sector will once again experience a hostile takeover bid, something that has not happened since the 80s.

BBVA's offer does not improve on last week's, nor does it pay part in cash, which was expected if the bank decided to take this step. The Basque bank is again proposing one BBVA share for 4.83 Sabadell shares, a price which, although it represented a 30% premium when it was announced, was made less attractive for Sabadell shareholders due to the performance of both on the stock market. BBVA will carry out a capital increase for the to provide for the exchange.

In the letter that Torres sent to Oliu on Sunday night, BBVA already warned that it considered its offer had been generous and had no room to improve it. Thus it has kept the same prices now as it moves to buy 100% of the bank on the market.

BBVA has not given many more details of the offer, since, being hostile, it does not need to negotiate with the Sabadell council. As it informed the CNMV, the bank will publish the offer prospectus, which must include all the details and plans for the entity it is bidding to acquire, within two weeks. The offer, of course, is formulated exclusively on the Spanish market, the only stockmarket on which Sabadell's shares are traded.

The swap proposed, one BBVA share for 4.83 Sabadell shares, represents a premium of 30% over the closing prices of the two institutions on April 29th and 50% over the weighted 3-month average, the same as it offered to the Catalan bank last week.

Torres continues to state that this is an "extraordinarily attractive" offer, as the BBVA chair president argued in a statement in which he emphasized that Sabadell's shareholders will have a 16% stake in the resulting entity.

BBVA communicated this news to the market around 7am this Thursday morning, three days after Sabadell rejected its friendly offer on Monday afternoon. Although it has already advanced that the offer launched today on the market is conditional on obtaining more than 50.01% of Banco Sabadell's share capital, the approval of BBVA's General Shareholders' Meeting and the approval of the National Commission on Markets and Competition (CNMC) and the UK Prudential Regulation Authority. 

It also stated that the operation would be closed in a period between six and eight months, once it receives the necessary authorizations. JP Morgan SE, UBS Europe SE, Rothschild & Co, Garrigues and DWP are advising BBVA on the operation.