Sabadell pursues retail investors after BBVA bid turns hostile

By Jesús Aguado

MADRID (Reuters) -Spain's Sabadell has told its retail shareholders the bank has "excellent prospects" alone and that they may not need to make a decision about BBVA's 12.23 billion euro ($13.3 billion) hostile takeover attempt until 2025.

Retail investors make up nearly half of Sabadell's shareholder structure.

BBVA, whose approach turned hostile after its smaller rival rejected its initial offer, had set itself a minimum approval threshold of 50.01% of Sabadell shareholders. This means that winning over smaller investors will be a key plank of Sabadell's efforts to stop the takeover attempt from succeeding.

In a letter being sent to Sabadell's shareholders this week, Sabadell Chairman Josep Oliu said investors did not have to take any decisions at this stage, "as the takeover bid process may continue until the end of 2024, or even 2025".

"It would be then that the board of Banco Sabadell would issue a public and detailed recommendation regarding the bid and you would have to make your decision," Oliu said in the letter seen by Reuters.

Oliu said the bank had "excellent prospects", citing an estimated 2.4 billion euros in shareholder remuneration that will be paid out in 2024 and 2025 and expectations Sabadell's profitability will improve.

He also noted that Sabadell's shares have risen to 1.91 euros per share on May 24 from 0.35 euros per share on Dec. 31 2020. This, he said, made the stock the best performer among the Spanish market's IBEX 35 constituents during that period, which included a boost to its shares from news of BBVA's interest since late April.

BBVA made an all-share offer for Sabadell last month, which was rejected, prompting the Spanish bank to turn hostile.

BBVA has offered an exchange ratio of one newly-issued BBVA share for every 4.83 Sabadell shares, a premium of 30% over April 29 closing prices. That premium was around 7% on Tuesday, valuing Sabadell at about 11.1 billion euros, according to Reuters calculations.

Last week, BBVA asked the stock market supervisor CNMV to authorise its takeover offer for Sabadell, a potential tie-up of lenders that Madrid opposes.

BBVA had said that the process could take six to eight months, before formally going to shareholders.

A spokesperson for BBVA said on Tuesday that a successful bid would mean "it has been approved by multiple supervisors and has been widely accepted and supported by hundreds of thousands of investors, mostly Spanish citizens".

"After that process is when the economy ministry will have a say about the merger and we are fully confident that it will appreciate the benefits of the transaction as it will generate a better company for all stakeholders," the spokesperson added.

($1 = 0.9185 euros)

(Reporting by Jesús Aguado; Additional reporting by Andres GonzalezWriting by Tommy Reggiori Wilkes;Editing by Jan Harvey and Emelia Sithole-Matarise)