A rare hostile takeover bid in Europe's banking sector has shocked markets – CNBC

The board said on Monday that BBVA’s initial bid “significantly underestimated” the bank’s growth prospects, adding that a standalone strategy would create superior value. The bank reiterated this position on Thursday, when BBVA made an all-share offering directly to the bank’s shareholders.

BBVA Said The company’s acquisition offer has the same financial terms as the merger presented to Sabadell’s board of directors. The paper characterized the proposal as “very attractive”, which if successful would create Spain’s second-largest financial institution.

“We have presented Banco Sabadell’s shareholders with a very attractive offer to create a bank of greater scale in one of our most important markets,” BBVA Chairman Carlos Torres Vila said in a statement. “

“With an additional €5 billion of annual lending capacity in Spain, we will join forces to make an even greater positive impact in the regions in which we operate.”

BBVA’s shares were down 6% around midday London time on Thursday, while Sabadell’s shares were up more than 3%.

Hostile takeovers are not common in the European banking sector, and BBVA’s decision to proceed in this manner surprised many.

Carlo Messina, CEO of Intesa Sanpaolo, Italy’s largest bank, told CNBC on Wednesday that there are significant challenges to domestic integration of the region’s banking sector.

He said that while it is difficult to complete a “friendly transaction” in the current market environment, it is also “not so easy” to proceed with a hostile takeover.

David Benamou, Axiom’s chief investment officer, said BBVA’s offer for Sabadell reflected “a very, very strange situation.”

Appearing on CNBC’s “Squawk Box Europe” on Thursday, Benamou said the proposed proposal “makes sense” from the perspective of Sabadell shareholders and is likely to pass in his opinion. said. He cited the fact that BBVA’s offer represents a 30% premium over the banks’ closing prices on April 29.

“This reflects all the concerns about UBS’s Credit Suisse merger and financial stability that have been discussed recently in Switzerland,” he added.

“I think it would be quite difficult to execute the deal. You could argue that it’s the same geography, but in theory the cultures are very close, as opposed to a cross-border merger. .”

Benamou said the rapid trend of consolidation among European banks is not surprising, especially since many regional financial institutions are “very small” compared to their U.S. peers.

Spain’s Economy Ministry said in a statement that the government rejects BBVA’s hostile takeover offer for Sabadell “in both formal and substantive terms.”

The ministry also warned that the proposed agreement would have “potential negative consequences for the Spanish financial system.”