Spain’s stock market supervisor has authorised BBVA’s enhanced bid for Banco Sabadell, clearing the way for shareholders to decide on the proposed takeover.

The revised offer, announced on Monday, values Sabadell at approximately 17 billion euros, or 3.39 euros per share, representing a 10 per cent increase from the previous proposal. BBVA is offering one of its own shares for every 4.8376 Sabadell shares, with the acceptance period now extended until 10 October.

The Spanish regulator’s approval follows a period of negotiation and adjustment, with BBVA seeking to address concerns raised by Sabadell’s board and shareholders. The new terms include improved tax treatment for shareholders, as the consideration is entirely in shares. This means, provided take-up exceeds 50 per cent of Sabadell’s voting rights, the transaction would generally be tax neutral for Spanish investors. BBVA has also stated that the merger would result in earnings per share for Sabadell shareholders around 41 per cent higher than if the bank remained independent, based on projected post-merger synergies and net income figures.

Sabadell’s board now has five days from the regulator’s authorisation to issue its opinion on the improved bid. However, chief executive officer Cesar Gonzalez Bueno has already indicated that the board is unlikely to recommend the new price, describing the increase as “small” and the offer as “bad” in a recent radio interview .

The offer represents a premium of 1.6 per cent to Sabadell’s market close on Friday, rising to 2.89 per cent as of Wednesday’s close, as Sabadell shares have underperformed BBVA’s since the announcement. Shareholders who have already tendered their shares will benefit from the improved terms without needing to take further action.

BBVA’s pursuit of Sabadell marks a significant moment for the Spanish banking sector, with the deal set to strengthen BBVA’s position as one of Europe’s largest lenders by market value. The company’s board has agreed not to make further improvements to the offer or extend the acceptance period, signalling its commitment to the current terms.

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