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BBVA Breaks Rare Trend in European Banking with Hostile Takeover Bid for Sabadell

In European banking, hostile takeover bids are rare, but Spanish bank BBVA broke this trend by announcing a 12.23 billion euro ($13.11 billion) all-share offer for rival Sabadell, despite Sabadell’s board previously rejecting a similar proposal on the same terms. BBVA’s Chair, Carlos Torres Vila, described the proposal as “extraordinarily attractive” and stated that it would result in a bank with greater scale in one of their most important markets. This would create Spain’s second-largest financial institution, with additional loan capacity of €5 billion annually in Spain. Hostile takeover bids are challenging in the current market environment, according to Carlo Messina, CEO of Italy’s largest bank, Intesa Sanpaolo. David Benamou, CEO of Axiom, believed that BBVA’s offer represented a 30% premium over both banks’ closing prices on April 29th and that it made sense from Sabadell shareholders’ perspective. However, Spain’s Economy Ministry expressed rejection towards the hostile takeover bid, stating that it introduced potential harmful effects on the Spanish financial system. This move is unusual, as hostile takeovers are infrequent in European banking.

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