Sabadell CEO Critiques BBVA’s Acquisition Efforts
The CEO of Sabadell, a prominent Spanish bank, has expressed strong disapproval of BBVA’s aggressive buyback attempts. He described the current bid as “totally derailed,” emphasizing the overwhelming risk that it poses. BBVA, which is the second-largest bank in Spain, has been trying for 16 months to acquire smaller competitors in a deal valued at approximately 15.3 billion euros (or about $18 billion).
Cesar Gonzalez-Bueno, Sabadell’s CEO, discussed this on CNBC’s “Squawk Box Europe” and stated that he believes the BBVA offer fundamentally undervalues the bank. He urged Sabadell shareholders to reject the proposal. They have until October 7th to choose between accepting BBVA’s all-share offer or continuing to support Sabadell’s independent strategy.
This decision comes in the wake of an unusual government intervention that approved the acquisition but prohibited operational integration for at least three years to safeguard jobs. Gonzalez-Bueno argued that these government conditions make it virtually impossible to realize the promised benefits of such a merger. He also cautioned that a complete integration “never happens” in Spain, given the significant public backlash and the necessity for another governmental approval afterward.
Onur Genc, the CEO of BBVA, had previously remarked on the deal’s vast importance, suggesting that having larger banks is essential for competitiveness in the global banking sector, especially in Europe. He noted that smaller banks struggle to survive without finding integration paths. Yet, Gonzalez-Bueno countered that forming a banking conglomerate controlling nearly 25% of the market might have negative repercussions. He mentioned that if the deal were to go through, Sabadell’s small and medium-sized business customers might seek other banking options to diversify. He even stated that half of their clients belong to Banco Sabadell.
In light of the market’s reaction, Sabadell’s stock has seen a significant increase since the bid was announced, even erasing the initial 30% premium and leaving a current discrepancy of about 9%. BBVA did not respond immediately to requests for comments regarding this situation.
Some analysts, such as those at Bank of America, have characterized the deal as not dead but “diluted.” They predict potential cost savings of around 450 million euros annually, suggesting that despite the regulatory restrictions, BBVA still holds a solid industrial and financial foundation. They believe the deal remains viable in the short term.
Additionally, an analyst consensus compiled by FactSet suggests that BBVA’s stock will likely trade at fair value. While BBVA asserts it can proceed legally until late September, no plans to increase the offer were indicated. Following the announcement, a ratings agency forecasted substantial benefits for BBVA’s shareholders, noting the expected merger would create significant advantages. Analysts believe this combination could reshape the competitive landscape, resulting in three major players in the Spanish banking market, controlling nearly 65% between them.
