Overview

• BBVA confirmed on August 11 that it will not withdraw its hostile takeover offer after Sabadell shareholders approved the sale of its British unit TSB and a €2.5 billion special dividend
• The bank plans to file an updated prospectus with Spain’s CNMV in early September and launch a 30- to 70-day acceptance period during which it may improve its terms up to five days before closing
• Spain’s competition authority and the government have mandated a three-year operational separation, extendable to five years, curtailing expected integration synergies
• Sabadell shares jumped more than 1.5 percent on August 12 while BBVA stock fell over 1 percent, reflecting market expectations that BBVA must sweeten its offer to bridge the negative premium
• BBVA has authorization to issue up to 1.126 billion new shares or boost the cash component of its bid but faces pressure to balance a higher offer against preserving value for its own shareholders