BBVA May Drop Sabadell Bid Over Profitability Concerns

BBVA has signaled it may abandon its takeover bid for Banco Sabadell if the proposed deal fails to meet its profitability criteria, marking the strongest indication yet that the Spanish lender is ready to proceed independently.

Speaking on July 31 during the presentation of BBVA’s first-half results and its 2025–2028 strategic plan, CEO Onur Genç said the bank would “turn the page” if the acquisition terms prove unfavorable. “There are no guarantees,” he told analysts and media, stressing that BBVA’s decision will be based strictly on financial merit.

The comment comes ahead of a pivotal August 6 shareholder meeting at Sabadell, where investors will vote on the proposed sale of TSB Bank to Santander and a €2.5 billion special dividend.

Genç reaffirmed that BBVA is under no obligation to move forward with the transaction if the value proposition diminishes, particularly in light of potential regulatory hurdles that could be imposed by Spain’s antitrust authority or the central government.

While Spanish law permits limited conditions under which a public takeover bid (OPA) can be withdrawn, Genç noted that BBVA could still exit the deal if its profitability is compromised.

Meanwhile, BBVA unveiled its updated financial targets for 2025–2028, aiming to generate €48 billion in net profit and return €36 billion to shareholders through dividends and share buybacks. The bank had initially planned to reveal these targets after the outcome of the Sabadell offer.

Sabadell, which has resisted the takeover, previously outlined its own plan to deliver €6.3 billion to shareholders over three years and boost return on equity to 16% by 2027—including the planned €2.5 billion dividend.

Despite recent speculation, Genç ruled out any improvement to BBVA’s offer. He emphasized that the current proposal represents a 30–50% premium over Sabadell’s pre-offer share price average. “The offer is the offer,” he said, adding that BBVA has no intention of lowering the 50.01% minimum acceptance threshold.

Genç also underscored the strategic rationale for the merger, pointing to rising fixed costs in areas such as artificial intelligence, cybersecurity, and regulatory compliance. BBVA currently invests €1.1 billion annually in technology in Spain and €4 billion globally.