Major Banking Merger on the Horizon
Green Light from Mexico Paves Way for BBVA-Sabadell Deal
In a significant development, the Mexican Federal Economic Competition Commission (Cofece) has given its approval for BBVA’s proposed acquisition of Banco Sabadell’s shares in various Mexican subsidiaries. This move marks a crucial step forward in the merger process, which was first proposed in May 2024.
A $13.4 Billion Offer
BBVA’s offer to Banco Sabadell shareholders is valued at $13.4 billion, with a proposed exchange rate of one BBVA share for every 4.83 Sabadell shares. This represents a 30% premium over the banks’ closing prices on April 29 and a 50% premium over the average prices of the previous three months.
Strengthening BBVA’s Position in Spain
The merger is expected to increase BBVA’s loan market share in Spain to nearly 22%, solidifying its position as a major player in the country’s banking sector. The combined entity will have over 100 million customers and assets surpassing €1 trillion, making it Spain’s second-largest bank.
Dual Headquarters in Spain
The new bank will have dual headquarters in Spain, with locations in Banco Sabadell’s corporate center in Sant Cugat del Vallès (Barcelona) and Ciudad BBVA in Madrid. This strategic move will enable the bank to tap into the strengths of both regions.
Regulatory Approvals and Challenges
While BBVA has already secured regulatory approvals from the UK’s Prudential Regulation Authority and the European Central Bank, it still needs to obtain authorization from the Spanish competition authority (CNMC) and the Spanish securities markets regulator (CNMV). Moreover, the Spanish Government has expressed concerns about the potential risks to the financial system and impacts on employment and customers.
Next Steps
BBVA now awaits the acceptance of the offer by a majority of Banco Sabadell shareholders, exceeding 50.01%. The completion of the deal is contingent on acquiring a majority stake in Banco Sabadell and further regulatory approvals. As the merger process unfolds, it remains to be seen how the parties involved will navigate the remaining hurdles.
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