Alex Trelinski
SPAIN’S government will allow the €11 billion BBVA hostile takeover of Sabadell Bank to go ahead but under strict conditions that could see the bid being scrapped.
The biggest caveat is that the two banks cannot be merged for at least three years with an option for an extra two years.
No redundancies would be permitted at either entity during the period or changes to branches, i.e. closures.
READ MORE:
- Sabadell looks to sell off British bank TSB to fend off hostile takeover by Spain’s BBVA
- The EU warns Spain not to block €11 billion BBVA-Sabadell mega-merger
The Economy Minister, Carlos Cuerpo, said on Tuesday that the Council of Ministers had agreed to allow the BBVA bid on the condition of ‘maintaining the legal personality, the separate assets and the autonomy in the management of both entities’.
“It is a decision that is proportionate, balanced and within the framework of Spanish regulations,” Cuerpo added.
The government announcement came after a public consultation period launched in May.
Its terms mean that BBVA has a major decision to make over accepting the government demands; to make a Supreme Court challenge; or simply walkway from its Sabadell bid.
The BBVA chairman, Carlos Torres, said on Monday that it would be ‘illegal’ for the government to impose extra conditions.
He also said that if profitability was affected, the offer would be withdrawn
BBVA had been preparing to launch its formal tender offer to Sabadell shareholders in the coming weeks.
Sabadell meanwhile has been looking to pay shareholders more to fend off the takeover by the potential sale of the TSB Bank in the UK.
The government’s ban on an immediate full merger would come into force if BBVA’s takeover bid was successful.
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