By Elena Vardon


Banco Bilbao Vizcaya Argentaria launched a hostile bid for Banco De Sabadell, despite its board's earlier rejection of an initial proposal on the same terms.

BBVA is now formally going directly to Sabadell's shareholders in the hope of pushing through a merger of the two banks.

The Spanish lender is offering to takeover its smaller rival through an all-share deal offering one new BBVA share for every 4.83 Sabadell shares, it said Thursday, the same exchange ratio initially proposed by BBVA.

It values the target's shares at EUR2.12 each--implying a total value of 11.53 billion euros ($12.39 billion)-- based on the average price of the quarter prior to the announcement. Sabadell shares closed at EUR1.80 on Wednesday.

Earlier this week, Sabadell's board rejected BBVA's approach saying the proposal put forward was unsolicited and substantially undervalued its potential and its standalone growth prospects. It also published a message it received from BBVA's chair underlining that the bidder had no room to improve the terms of the offer. BBVA shares have fallen since the merger interest news emerged last Tuesday, effectively reducing the 30% premium on the stocks' closing prices on the day before the talks were reported.

"We are presenting to Banco Sabadell's shareholders an extraordinarily attractive offer to create a bank with greater scale in one of our most important markets," said BBVA Chair Carlos Torres Vila said. Sabadell didn't immediately respond to a request for comment from Dow Jones Newswires.

The approval of shareholders representing at least 50.01% of its share capital is needed for the offer to be accepted.

The pair considered a merger in 2020 but failed to reach an agreement over the price and called off the talks.


Write to Elena Vardon at elena.vardon@wsj.com


(END) Dow Jones Newswires

05-09-24 0234ET