MADRID – Spanish bank BBVA’s (NYSE: BBVA) hostile takeover bid for smaller rival Sabadell, aimed at creating a bank with assets over 1 trillion euros ($1.06 trillion), must undergo a longer anti-trust review, Spain’s competition watchdog said on Tuesday.
The more in-depth second phase review is expected to prolong the deal process well into 2025 and also signals that BBVA may be required to make greater concessions to address competition concerns.
The opening of the second phase does not prejudge the final conclusions the CNMC watchdog may reach, the agency said in a statement.
BBVA (NYSE: BBVA), which shocked Spain in May when it turned hostile in its pursuit of Sabadell with a bid worth more than 12 billion euros ($12.8 billion) at the time, relies on Mexico for more than half of its profit. Combining with Sabadell would allow it to increase lending to small and medium businesses in Spain.
A BBVA spokesperson said the lender would continue to work “constructively” with the Spanish competition body to finalize an agreement on remedies and the deal’s approval “as soon as possible”.
A Sabadell spokesperson said the CNMC’s decision confirmed the complexity of BBVA’s bid, which requires a study of the deal’s impact on competition in Spain’s banking sector.
The anti-trust body said the first phase included a detailed investigation into competition in the affected markets and the second phase would deepen the analysis.
Moving to a second phase review could add three months to the process.
The government opposed the deal, citing concern about how its impact on competition would affect consumers.
Under Spanish law, the government cannot stop a bid from being made, but it has the final word on whether a merger goes ahead. In addition, the CNMV and the antitrust watchdog CNMC must also authorize the deal.
Formerly, Spanish Economy Minister Carlos Cuerpo said BBVA’s bid could extend well into the first quarter of 2025 if the competition authorities required a more in-depth analysis.
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