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The Spanish government has launched a new obstacle on the route of hostile supply of 11 billion euros from BBVA for Rival lender Sabadell, declaring that the potential buyer cannot merge the two entities for at least three years.
The Spanish Minister of the Economy, Carlos Cuerpo, said that the cabinet had decided that the two entities should “maintain separate identities and legal assets, as well as autonomy in the management of their activities” for three years and perhaps more.
The decision, which occurred after an examination of the cabinet launched last month, means that BBVA must now decide to accept the conditions, to challenge them before the courts or to drop its offer.
Carlos Torres, the president of the BBVA who organized the offer, said on Monday that he would be “illegal” for the government to impose additional conditions.
This decision also puts the government led by the socialists on a trajectory of potential collision with the European Commission. A commission spokesperson said on Tuesday that “any conditions imposed by a government to approve a transaction should be exceptional, proportioned and justified by valid reasons of public interest”.
“If necessary, the Commission will use its powers as a guardian of the treaties to remove any unjustified restriction on the single market imposed by the Member States,” they added.
Since its launch in May 2024, the hostile offer has become the most temperate buyer saga in Spain for years. The Sabadell board of directors, which initially rejected a friendly approach to BBVA, is opposed by Sabadell, as well as by the business elite in Catalonia, where Sabadell has roots.
BBVA had prepared to launch its official tender offer to Sabadell shareholders in the coming weeks. The Spanish government’s ban on a complete merger would come into force if BBVA’s candidacy had succeeded.
Cuerpo said that banks would be required to act independently in fields such as credit supply to small businesses, human resources and management of their branch networks. The objective of the two separate entities must be to “maximize their value independently,” he said.
He added that banks should submit reports on their actions before a deadline for three years. “Once this condition is the effectiveness of this condition, the firm will determine the opportunity to extend the duration of this condition for two more years, from three to five years,” he said.
By anticipating potential judicial disputes, Cuerpo said that the government’s ability to act to defend small businesses, workers and regional economies was supported by Spanish law and “by the case law of the European Court of Justice”.
Sabadell said that if BBVA had chosen to apply, it must provide information on the impact of government’s conditions “both on its ability to provide synergies and its ability to remunerate shareholders in the future. Such information is relevant to Sabadell shareholders. ” BBVA said he “assessed” the government’s decision.
It was already known that after a successful takeover offer, Spanish law would give the government a separate opportunity to oppose its veto to a legal merger of the two banks. However, this decision nevertheless took the sector by surprise.
Last week, Financial Times said that Sabadell had explored the sale of his British Bank TSB when she was trying to repel the hostile approach to BBVA. The interested parties had to make formal offers at the end of June, with Barclays and Santander among the banks that planned to make an offer.
If BBVA succeeded in its takeover of Sabadell, it was planned that the bank seeks to unload the TSB. However, Tuesday’s Spanish government’s decision means that BBVA was unable to orchestrate the sale of TSB for at least three years while the two companies have remained distinct legal entities.
Sabadell management could, however, choose to go ahead with a sale of TSB even after taking control by BBVA provided that it is considered in the best interest of Sabadell and has not violated other government criteria.
Simon Foy additional reports in London
