BBVA Hires PR Firm Kreab to Navigate Hostile Bid for Banco de Sabadell
BBVA, the second-largest bank in Spain, has enlisted the services of PR firm Kreab as part of its strategy to forge ahead with its hostile bid for Banco de Sabadell SA. The move is aimed at influencing both the government and the public in favor of BBVA, particularly as the Spanish Economy Minister and Catalonian politicians have raised concerns regarding the potential impact of the deal on competition and the local financial industry. This development follows BBVA's direct offer to Sabadell shareholders and its suggestion that the government may adopt a more lenient position post-elections. Sabadell, with its extensive retail shareholder base linked to Catalonia, remains entangled in political intricacies. A merger between the two entities would establish a banking powerhouse with assets exceeding €1 trillion. BBVA has committed to upholding its presence in the regions it operates in and maintaining the head office in Sabadell's current location. Despite the need for regulatory approvals, the possibility of the government vetoing the legal merger looms, potentially leaving BBVA with a controlling stake in Sabadell without actual consolidation if opposition persists.
Key Takeaways
- BBVA engages PR firm Kreab to bolster its position in the hostile bid for Banco de Sabadell
- Spanish government expresses opposition to the deal, citing concerns about competition and Catalonia's financial industry
- BBVA Chairman Carlos Torres hints at the likelihood of a softening government stance post-Catalonia elections
- Sabadell possesses a substantial retail shareholder base with ties to Catalonia and a sizable stake held by the 24 largest investors
- The merger would result in the formation of a Spanish banking colossus with assets exceeding €1 trillion and a market cap close to €70 billion
Analysis
BBVA's aggressive pursuit of Banco de Sabadell encounters resistance from the Spanish government due to apprehensions about competition and regional ramifications. The retention of PR firm Kreab is a strategic move aimed at swaying public sentiment. A successful merger would give rise to a banking titan with assets surpassing €1 trillion, thereby impacting other financial institutions and the Spanish economy. Although the government holds the authority to reject the deal, this could lead to BBVA maintaining a controlling stake without consolidation. Carlos Torres' indication of a potentially softer government stance post-elections underscores the influence of political variables. Changes within Catalonia's financial sector and among its retail shareholders could also transpire. The unfolding of future developments is contingent upon the outcomes of elections and regulatory determinations, potentially reshaping Spain's banking landscape.
Did You Know?
- Hostile bid: A takeover attempt in which the target company's management does not support the acquisition. In this case, BBVA is making a direct offer to Sabadell shareholders without the approval of Sabadell's board of directors, potentially leading to tension and legal challenges.
- Regulatory approvals: Prerequisites for the completion of a merger, involving consent from regulatory bodies to ensure compliance with relevant laws and regulations. BBVA and Sabadell must secure approvals from Spanish regulators and the European Central Bank.
- Controlling stake: Ownership of more than 50% of a company's shares, providing decisive influence over its decisions and operations. BBVA aims to secure a controlling stake in Sabadell, even without a completed merger, by acquiring a sufficient number of existing shares.