Sabadell Shares Climb After BBVA Details $13 Billion Merger Proposal

By Adria Calatayud

Banco de Sabadell shares jumped after suitor Banco Bilbao Vizcaya Argentaria set out details of a merger proposal that values its smaller Spanish rival at about 12.3 billion euros ($13.18 billion).

At 0837 GMT on Thursday, Sabadell shares were trading 5.6% higher at EUR1.90, building on gains logged after news of the approach broke on Tuesday and giving it a market capitalization of EUR10.4 billion. Meanwhile, BBVA shares fell 2% to EUR9.98, taking their loss so far this week to 9.1%.

This was the first market reaction to details of the merger proposal that BBVA made public on Wednesday, when the Spanish market was closed for the May Day holiday.

BBVA said it would offer one of its own shares for every 4.83 Sabadell shares, which represents a 30% premium to the target's closing price on Monday, before the news of the proposed merger emerged. Based on BBVA's own share price on Monday, the proposal would value Sabadell at EUR12.3 billion.

Despite the premium, the numbers of the proposed deal work for BBVA and the strategic rationale appears valid, analysts at Jefferies wrote in a note to clients.

A potential deal would make the resulting entity one of the largest banks in Europe and BBVA said its aim is to become the eurozone's biggest by market capitalization.

BBVA and Sabadell have attempted a merger before. In 2020, talks fell apart after they failed to reach an agreement over price. Sabadell's share price has risen significantly since then, with the stock up nearly 71% in 2024 to date alone.

Write to Adria Calatayud at adria.calatayud@wsj.com

(END) Dow Jones Newswires

May 02, 2024 05:05 ET (09:05 GMT)

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