Failed BBVA-sabadell Merger: What it Means for Small Shareholders
The proposed merger between BBVA and Banco Sabadell has collapsed after Sabadell shareholders rejected the offer. This outcome has direct consequences for individuals who hold shares in both banks.
For Sabadell Shareholders Who Accepted the Offer:
BBVA successfully acquired 1,272,671,801 shares of Banco Sabadell, representing 25.33% of the shares targeted by the offer and 25.47% of the voting rights. However, with the merger failing, BBVA will return the shares of those who accepted the offer as if the bid never occurred. This means shareholders who tendered their Sabadell shares will have them returned to their brokerage accounts.
for Sabadell shareholders Who rejected the Offer:
The rejection of the merger by the majority of Sabadell shareholders initially led to a critically important drop in the bank’s share price. At the opening of trading on Friday, November 8th, Sabadell shares fell by over 6.4%, reaching €3.02 per share. Sabadell’s President,Josep Oliu,has stated the outcome is “the best solution for everyone” and thanked shareholders for their support.
For BBVA Shareholders:
While the merger didn’t proceed,BBVA maintains its financial strength and has outlined plans to return capital to shareholders.The bank will resume a share buyback program worth €1,000 million. Furthermore, a dividend of €0.32 per share will be paid on November 7th, representing a total distribution of €1.8 billion. BBVA’s leadership has emphasized that the bank’s project remains attractive due to its growth, profitability, and dividend prospects.
BBVA also plans “significant additional share buybacks” pending authorization from the European Central bank (ECB). The bank intends to distribute a total of €36 billion to shareholders by 2028, with €13 billion available in the short term. The news of the failed merger and these shareholder-focused plans led to a 7% increase in BBVA’s share price on the Spanish stock market on Friday, November 8th, and a 6.68% rise ($19.48 per share) in the US market (through ADRs).
Overall:
The failed merger means Sabadell will continue as an self-reliant entity, while BBVA will refocus on its existing strategy and prioritize returning capital to its shareholders. The immediate impact for small shareholders has been a price fluctuation in Sabadell shares, while BBVA shareholders are poised to benefit from increased buybacks and dividends. BBVA reported profits exceeding €10 billion in 2024 for the first time in its history, bolstering its capacity for shareholder returns.
