Spanish banks BBVA and Sabadell weigh $12.93 bn all-stock merger

Spanish bank Sabadell on Monday said it is considering a proposal by larger peer BBVA for a Euro 12 billion ($12.93 billion) all-stock merger that would create the largest banking company in Spain.

The merged entity, with over Euro 1 trillion in assets and over 100 million customers worldwide, would be one of Europe’s largest and most robust financial entities, with potential to become the strongest bank in the Eurozone in terms of market capitalisation, according to a BBVA statement.

Banco de Sabadell, SA is a Spanish multinational financial services company headquartered in Alicante and Barcelona, Spain. It is the fourth-largest Spanish banking group with several subsidiaries and associated banks.

Based in Madrid and Bilbao, Spain, Banco Bilbao Vizcaya Argentaria, SA (BBVA), is among the world’s the largest financial institutions with operations mainly in Spain, Portugal, Mexico, South America, Turkey, Italy and Romania. 

BBVA, in its letter to the board of directors of Sabadell said the consolidation would benefit both entities, theie employees, customers and the larger public.

The increased scale of operation would allow the merged entity to better address issues like operational efficiency, meeting investor and consumer needs as well digital transformation, the letter adds.

Besides, BBVA said Sabadell’s stature as the banking sector benchmark in Spain and BBVA’s leadership in digitalisation and operational sustainability would make the merger a strategic fit.

BBVA also said the merged entity would be able to serve the industrial powerhouse of Spain, Catalonia, which is a key market for both banks.

BBVA, however said the proposed merger would in no way alter the basic operational culture of the two banking companies.

Under the proposed merger, Banco Sabadell shareholders will get 1 newly issued BBVA share for every 4.83 Banco Sabadell shares, which, according to BBVA, is a 30 per cent premium to the stock’s closing price on 29 April and 42 per cent on the weighted average prices of the last month. This would add up to a 16 per cent share for Banco Sabadell shareholders in the merged entity.