Sabadell: the longest acquisition in history

Twelve months is a long time if the bank is being pursued for a merger or acquisition by another bank. But it has clearly been insufficient if the takeover bidder is defending himself with all his might.

BBVA's takeover bid for Sabadell is already the longest-running operation in the history of Spanish banking, and despite the near end, no one dares to predict its outcome. The constant twists and turns (the latest this week with the unprecedented public consultation launched by the government) are even unsettling the market, which is driving the share price into unusual swings in the final stretch of the takeover bid. On Friday, the premium to acquire Sabadell fell back into negative territory (-3.7%) after days of hovering near 0. This means that if the takeover bid had been held on Friday, Sabadell shareholders who accepted BBVA's offer (which is in shares) would have lost more than 3% of their investment.

Markets see no end in sight and leave the takeover bid premium back in negative territory.

When President Pedro Sánchez informed BBVA President Carlos Torres and Sabadell President Josep Oliu at his Cercle conference on Monday that a form had been opened allowing all affected parties to comment, the initial moments were filled with confusion because it was unclear whether this mechanism would paralyze the deadlines and lengthen the operation. It wasn't until hours later that Carlos Cuerpo's Ministry of Economy confirmed that everything would proceed within the legally established 15-business-day deadline to decide whether to submit to the Council of Ministers the decision on whether to authorize the takeover bid with the conditions imposed by the CNMC, reduce those commitments, or establish new ones based on the general interest.

The consultation led Catalonia's main economic entities (such as employers' associations), at the request of the Chambers of Commerce, to sign a letter to Sánchez this Friday, urging him to prevent the transaction and for Sabadell to remain an independent entity. Meanwhile, these same entities and others, such as the Circle of Economy and the unions, are preparing their comments on the public consultation form.

The Executive has made it clear that it is against it

When the transaction reaches the Cabinet, it remains unclear what measures it may adopt. Sources consulted believe they could be similar to those imposed by the Italian government on Unicredit, with the sale of parts of the business or the obligation to maintain certain credit percentages. However, less stringent measures—but costly for BBVA's interests—could also be imposed, such as a multi-year moratorium on laying off employees, closing branches, or merging with Sabadell.

If the conditions were so harsh that BBVA couldn't afford to continue, it could back out, as it has already stated at some point. If it were to go ahead, if the takeover bid were successful and it could merge with Sabadell, it would first need the government's approval. Until now, the Sánchez administration has hinted on every occasion that it is not in favor of the merger.

Whatever the case, what's certain is that the game is still open, and everyone involved assumes the final script is yet to be written. A script that, by the way, if it were a takeover bid agreed between the parties, would likely already have been finalized, with the purchase completed and executed.