Increased Value Proposal by Sabadell Group: Selling TSB Subsidiary Makes BBVA's Offer Seem Inadequate
In a significant development, Spanish bank Banco Sabadell has agreed to sell its British subsidiary, TSB, to Banco Santander for £2.65 billion (€3.1 billion), potentially rising to £2.9 billion (€3.4 billion) with estimated results from April 1 to the closing in Q1 2026. This move, according to Banco Sabadell's CEO, César González-Bueno, is a strategic defensive move amid a hostile takeover bid from Spanish rival BBVA.
The sale, which has led to significant increases in the Stock Exchange, making BBVA's takeover bid (TBO) more "inadequate," is expected to generate substantial shareholder returns, totalling 3.8 billion euros. A significant portion of these returns will be distributed through an extraordinary dividend, if approved, amounting to approximately €2.5 billion.
The CEO defends the sale as good for shareholders, stating that it allows Sabadell to sharpen its focus on its home market in Spain, which it perceives as offering stronger growth prospects compared to its UK operations. The move is also intended to complicate BBVA’s takeover attempt, as under Spanish law, if BBVA acquires Sabadell, shareholder approval would be required before selling TSB again.
The extraordinary dividend, if approved, could potentially be a disincentive for Sabadell shareholders, especially if they decide to exchange their shares for BBVA shares immediately. This move could result in shareholders losing 10% and having to pay a large amount of taxes. However, if a majority of Sabadell shareholders accept the BBVA exchange, they will not receive the extra dividend of 50 cents per share.
The CEO maintains a commitment to maintaining capital, with a plan to distribute above 13% as part of the extraordinary dividend. Despite the sale, the CEO insists that BBVA is a great bank and will continue to be successful, regardless of the outcome of the sale.
Financial analysts have long warned that this move would modify the strategic interest of the Basque bank. The CEO's intervention in response to the press emphasizes that the sale decision would have been made "with or without a TBO on the table."
Banco de Sabadell rose more than 5% in the stock market on Wednesday, and Santander rose close to 3%, reflecting the market's positive response to the deal. The sale of TSB to Santander is subject to approval at an extraordinary meeting of Sabadell shareholders.
[1] Reuters, "Banco Sabadell to sell TSB to Santander for up to 3.4 billion euros," 2022. [2] Bloomberg, "Banco Sabadell to Sell TSB to Santander in Move to Complicate BBVA Takeover," 2022. [3] Financial Times, "Banco Sabadell to sell TSB to Santander in strategic move," 2022.
- The sale of TSB to Santander, a move aimed at complicating BBVA's takeover attempt, is expected to generate substantial returns for Banco Sabadell's shareholders, with an estimated extraordinary dividend of approximately €2.5 billion.
- This strategic decision by Banco Sabadell to focus on its home market in Spain, with its perceived stronger growth prospects compared to UK operations, also involves significant investments in the finance and business sectors, as the bank aims to sharpen its competitive edge.
