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Sabadell and BBVA Merger Not Going Ahead (again / yet)

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After announcing plans to look into a merger last week, this week, on Monday, Banco Sabadell closed the door on the second attempted merger with BBVA.

In 2020, both entities studied merging, but it ended up declining after they did not reach an agreement on the share exchange ratio. On this occasion, Sabadell has been the one that has rejected the BBVA merger proposal and opts to continue alone. Thus, they reject the “unsolicited, indicative and conditional” proposal.

The board chaired by Josep Oliu considers that this project “significantly undervalues” Banco Sabadell’s plan “and its growth prospects as an independent entity.” The board of directors announced its decision after a day-long meeting. BBVA states that “we regret that the board of Banco Sabadell has rejected such an attractive offer.” Now, it remains to be seen if BBVA improves the offer or gives up taking over the bank.

Last Wednesday, BBVA announced its formal proposal for Sabadell. In it, they proposed an exchange of one newly issued BBVA share for every 4.83 Sabadell shares, with a 30% premium over the value at which Sabadell was listed on Monday, April 29. It was an offer that valued Sabadell at around 11 billion euro, following the price of BBVA’s last closing, of 9.84 euro per share. It also meant increasing the value of the share in Sabadell to 2.2 euro, taking into account the 30% premium.

The possible merger would form an entity with around 400 offices in the Valencian Community and about 2,500 workers in the autonomous community, with 211 offices in the region  -61 in Valencia, 132 Alicante and 17 in Castellón-, while  BBVA  accumulates 200.

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