In a letter addressed to the Board of Directors of Banco Sabadell, BBVA proposed merging the two entities to create the “most compelling industrial project in European banking”, according to a company statement. Firstly, the new entity would create one of Europe’s largest and most robust financial entities, boasting over €1 trillion in assets and serving more than 100 million clients worldwide, with the ambition of becoming the largest bank by market capitalization of the Eurozone.
The larger scale would allow the new entity to face the structural challenges of the sector in better conditions and reach a greater number of clients, efficiently addressing investment needs associated with digital transformation. The combined entity would be more solid and efficient, and a benchmark in the market by volume of assets, loans and deposits.
On the other hand, BBVA highlights the strategic fit and complementarity of both companies, with Banco Sabadell being the benchmark in Spain in the business segment and, like BBVA, a leading entity in digitalization and sustainability. In addition, Banco Sabadell’s presence in the United Kingdom would add to BBVA’s global scale and its leadership in Mexico, Turkey and South America. For all these reasons, the merged entity would be the best financial partner for families and companies, with a better product offering and a greater global capacity to accompany companies in their international expansion.
Ultimately, the capacity of the new entity to provide credit to the real economy would be amplified – with an estimated future impact of an additional €5 billion per year – as such contributing significantly to the process of transformation, innovation and decarbonization of the society.
In relation to the financial terms, the proposed exchange ratio is: 1 newly issued BBVA share for every 4.83 Banco Sabadell shares, which represents a 30% premium over the closing prices of April 29th; 42% on the weighted average prices of the last month; or 50% of the weighted average prices of the last three months. After the merger, Banco Sabadell shareholders would have a 16% stake in the resulting entity, thus additionally benefiting from the value generated by the operation.