Banco Sabadell Shareholders Reject BBVA’s Takeover Bid, Ending 18-Month Effort

BBVA's $19 billion takeover bid for Banco Sabadell failed after only 25.47% of Sabadell shareholders accepted the offer, falling short of the required 30% threshold, which analysts viewed as a key test for European banking consolidation. Following the rejection, Banco Sabadell announced plans to remain independent, targeting 16% profitability by 2027 and €6.45 billion in shareholder returns, while BBVA committed to resuming shareholder remuneration with a share buyback and record dividends, projecting €36 billion in distributions from 2025-2028.

Analysis

BBVA's $19 billion takeover bid for Banco Sabadell failed as only 25.47% of Sabadell shareholders accepted the offer, falling short of the required 30% threshold. This outcome, following a prior failed attempt in 2020, underscores the challenges of consolidation within the European banking sector, despite regulatory clearance from the CNMV and ECB. Analysts viewed this bid as a significant test case for broader industry M&A.

In response, Banco Sabadell announced a strategic pivot towards independent growth, targeting a 16% profitability by 2027. The bank also committed to returning €6.45 billion to shareholders by the same year, emphasizing its strengthened position post a five-year transformation. This signals a focus on organic growth and enhanced shareholder value as a standalone entity.

BBVA, despite the failed acquisition, outlined an ambitious strategic plan for 2025-2028, projecting €48 billion in cumulative attributable profit. The bank plans to resume significant shareholder remuneration, including a share buyback program and its "highest dividend ever," allocating €36 billion for distributions. This revised strategy aims to solidify BBVA's position at the forefront of European banking in terms of growth and profitability.

Key Decisions for Investors

• Consider the implications of this failed M&A on broader European banking consolidation strategies and potential shifts towards organic growth or smaller, targeted acquisitions.
• Monitor Banco Sabadell's progress towards its 16% profitability target and €6.45 billion shareholder return by 2027, as these metrics will validate its independent strategy.
• Evaluate BBVA's revised capital allocation plan, including the announced share buyback and record dividends, against its projected €48 billion profit and €36 billion distributions for 2025-2028, as this indicates a strong commitment to shareholder returns post-M&A.