Lost in La Mancha

27 November 2020 By Christopher Thompson Follow @CGAThompson

The Spanish lender broke off takeover talks with larger rival BBVA after rejecting an offer worth 2.5 bln euros. Cost savings potentially worth double that mean a deal still makes sense. Boss Jaime Guardiola must hope a vaccine-led rebound allows him to demand a higher price.

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BBVA and Banco de Sabadell on Nov. 27 called off merger talks after failing to agree financial terms.

The two banks had announced the talks on Nov. 16 as they looked for a deal to create Spain’s second-biggest domestic bank with almost 600 billion euros in assets.

“Banco Sabadell informs that the board of directors has decided to terminate the above-mentioned discussions, because the parties have not achieved an agreement on the exchange ratio of both entities,” Sabadell said.

Sabadell added that it would focus on developing a new plan with a priority on its domestic market, which it will announce in the first quarter.

The bank also said it analysed “strategic alternatives for creating value with regard to the group's international assets”, including British lender TSB.

Shares in Sabadell were down 11% at 0.35 euros by 0831 GMT on Nov. 27. BBVA shares were up 2% at 3.85 euros.

Context News

BBVA and Banco de Sabadell on Nov. 27 called off merger talks after failing to agree financial terms.

The two banks had announced the talks on Nov. 16 as they looked for a deal to create Spain’s second-biggest domestic bank with almost 600 billion euros in assets.

Sabadell added that it would focus on developing a new plan with a priority on its domestic market, which it will announce in the first quarter.

The bank also said it analysed “strategic alternatives for creating value with regard to the group's international assets”, including British lender TSB.

Shares in Sabadell were down 11% at 0.35 euros by 0831 GMT on Nov. 27. BBVA shares were up 2% at 3.85 euros.

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