Spain's second-largest lender BBVA has modified its takeover offer for rival Banco Sabadell to account for recent dividend payments from both banks, maintaining the economic value of the €12 billion deal.

Under the revised terms, BBVA is now offering one newly issued share for every 5.0196 Sabadell shares, plus €0.29 in cash. The cash component corresponds to an interim dividend that BBVA plans to distribute to its shareholders on October 10.

"The changes are intended to maintain the economic terms of the offer equivalent, following the dividend payments," BBVA said in a statement on Tuesday. The bank had previously proposed exchanging one BBVA share for every 4.83 Sabadell shares.

The adjustment comes as both Spanish lenders have increased their shareholder payouts amid the ongoing takeover battle. Sabadell, which opposes the deal, announced in July it would distribute €2.9 billion to shareholders over 2024 and 2025, marking an increase from the €2.4 billion previously promised. The bank delivered an interim dividend of €0.08 per share on Tuesday.

The takeover bid, which became hostile in May after Sabadell's management rejected it as too low, has faced political headwinds but received approval from the European Central Bank in September. BBVA has consistently maintained it will not improve the financial terms of the offer.

The value of the deal has shifted since its announcement, with BBVA's share price declining from €10.90 to €9.30. This reduction has lowered the takeover premium from the initial 30 per cent to approximately 7 per cent, based on Sabadell's closing price in late April. Current calculations suggest the deal now values Sabadell at roughly €10.8 billion.

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