Overview

• Banco Sabadell agreed to sell its UK arm TSB to Banco Santander for £2.65 billion after considering rival bids from Barclays and others.
• Proceeds from the transaction will finance a €3.8 billion dividend payout over the next 12 months to entice shareholders to reject BBVA’s hostile offer at an August 6 vote.
• BBVA’s board unanimously opted on June 30 to continue its takeover bid despite government rules mandating separate governance, and it has revised its synergy estimates accordingly.
• Legal experts warn Sabadell’s sale could breach its takeover duty of passivity under Spanish regulations, potentially requiring explicit shareholder approval.
• Following the announcement, Sabadell’s shares jumped about 3% and BBVA’s stock rose roughly 1.4% in early trading on July 2 as markets digested the defensive strategy.