Spanish Government Approves BBVA’s €14 Billion Sabadell Takeover With Three-Year Merger Ban Amid TSB Sale to Santander

The Spanish government has authorized BBVA's €14 billion takeover bid for Banco Sabadell but imposed strict conditions that prevent the two banks from merging for at least three years. The government requires that BBVA and Sabadell operate as separate entities during this period, maintaining independent legal status, separate assets, and autonomous management. This decision followed a temporary suspension of BBVA and Sabadell's stock trading by the CNMV pending the government's ruling on the takeover bid. BBVA is currently evaluating whether to proceed with the offer under these new constraints, considering options such as raising the bid, withdrawing the offer, or pursuing legal action.

Meanwhile, Banco Sabadell has agreed to sell its British unit, TSB Bank, to Banco Santander for approximately £2.65 billion (€3.4 billion or $3.64 billion), a move that adds complexity to BBVA's takeover attempt. Sabadell plans to distribute an extraordinary dividend of around €3.8 billion to shareholders following the TSB sale, which the bank insists is independent of BBVA's bid. The sale has intensified pressure on BBVA to improve its offer, as Sabadell's CEO stated the transaction increases the cost of the takeover. Sabadell has called two extraordinary shareholders' meetings on August 6 to approve the TSB sale and the associated dividend. Additionally, JP Morgan has acquired a 1.4% stake in Sabadell amid the ongoing takeover battle. The situation remains fluid as BBVA's board and investors deliberate on the next steps, with the possibility of judicial challenges against the government's restrictions on the merger.