One of BBVA's Main Shareholders Departs Due to Hostile Takeover of Sabadell

The president of Banco Sabadell, Josep Oliu, seems to have found an ally as unexpected as it is indirect to try to hinder the hostile takeover launched in May by its competitor BBVA. The American fund GQG Partners, which held a 3% stake in the Basque bank, has sold its stake precisely because of this controversial operation undertaken by the entity led by Carlos Torres.

Although the decision was made last July, it has now become known following a leak to the British newspaper Financial Times. According to those same sources, the motivation of GQG Partners, a major investor in several European banks and one of the five main shareholders of BBVA, is that it considers the offer for Sabadell would consume too much time and distract the entity from its purpose—which would include attending to other strategic objectives—besides diluting its exposure to emerging markets.

According to data from the National Securities Market Commission (CNMV), the Florida-based fund held a 3.090% stake in BBVA in February 2021, a stake it slightly reduced in August 2022 to 2.957%, reports Europa Press. Despite the importance of its investment in the bank, GQG Partners had decided not to intervene in any way regarding the controversial takeover nor give instructions concerning the voting rights it held.

Following the departure of this American firm, the main shareholders of BBVA are precisely another American fund, the powerful BlackRock with 6.68%, as well as Capital Research and Management Company, one of the three largest pension fund managers in the world, with 5.03%.

BBVA, which launched its proposal after previous contacts with Sabadell's management failed, already attempted the merger of both financial entities at the end of 2020, in the midst of the pandemic. Even then, they did not reach an agreement due to discrepancies in the exchange equation and the management structure of the resulting entity. Despite everything, the Basque bank insists that the operation still has a "strategic sense," although its Catalan competitor has flatly rejected it, considering that it can generate more value alone for the shareholders and that the takeover price undervalues its project.

After obtaining the approval of its shareholders' meeting and the European Central Bank (ECB)—which analyzed the operation solely from the perspective of solvency—BBVA is now waiting to receive authorization from the National Securities Market Commission (CNMV). But, especially, it awaits with anticipation the pronouncement of the National Commission of Markets and Competition (CNMC) on the project, aware of the stance adopted by the Government, which has been opposed to the merger from the outset.

The timetable managed by the entity led by Carlos Torres estimates that the process to launch the takeover bid for Sabadell will take about six to eight months from the announcement of the operation in May, including the time expected to obtain all necessary authorizations. In fact, for the CNMC, the bank estimates about five or six months, that is, until early November.

Thus, in a prospectus sent to the SEC—the U.S. stock market regulator—BBVA continues to maintain its forecast that the merger will be closed by the end of the first half of 2025. However, a few days ago, the Minister of Economy, Carlos Cuerpo, pointed out that the operation's timetable could extend "several more months, well into the first quarter of 2025" if the Competition analysis is prolonged and enters the so-called phase 2. Moreover, according to market sources, this "would possibly imply applying tougher conditions to the operation, which in turn would mean negative synergies" for the Basque bank.