France's BPCE buys 7% of Sabadell in friendly deal a day before BBVA bid deadline

PARIS — French banking group BPCE has acquired a stake of around 7% in Spanish lender Sabadell through market purchases and financial instruments, with plans to become a long-term shareholder, the two banks said in a joint statement on Tuesday.

BPCE intends to seek representation on Sabadell’s board and does not plan for its shareholding to exceed 9.9%, the statement said. The two companies did not disclose the value of the transaction, but at current market prices a 7% holding is valued at around €1.19 billion ($1.33 billion), Reuters reported.

Both sides stressed the friendly nature of the investment and said they would explore strategic cooperation, with BPCE’s capabilities made available to Sabadell’s clients. Sabadell is Spain’s fourth-largest bank and a leading lender to small and medium-sized businesses.

“BPCE’s investment in Sabadell is fully in line with its Vision 2030 strategic plan,” said BPCE chief executive Nicolas Namias. Sabadell chairman Josep Oliu said the bank was “very pleased” to welcome BPCE, calling the move “a recognition of the strength of our standalone project”.

The deal lands a day before the deadline on BBVA’s raised hostile bid for Sabadell. BBVA on Monday raised its offer by 10% to €3.39 a share, valuing Sabadell at €19.5 billion ($22.9 billion), and said it would make no further improvements or extend the October 7 deadline, AFP reported. Sabadell chief executive Cesar Gonzalez-Bueno called the improved offer “very weak” and “even worse”.