Valuation Disagreement and Bid Failure: An Analysis of BBVA's Takeover Bid for Banco Sabadell

Abstract

This study examines the failure of BBVA's hostile takeover bid for Banco Sabadell, launched in May 2024 and concluded in October 2025, through the theoretical lens of valuation disagreement. The central research question asks to what extent the bid's failure can be explained by the inadequacy of the offer price relative to Banco Sabadell's market-based valuation throughout the takeover period. Adopting a quantitative case-study design, the study reconstructs the implied value of the offer across three successive bid structures, tracks the evolution of the implied premium and absolute gap as continuous daily series, and translates the offer-implied value into standard banking valuation multiples, price-to-book value (P/BV) and price-to-tangible-book value (P/TBV), comparing these against Banco Sabadell's own market multiples and those of a peer group of listed Spanish banks. The results show that the implied premium declined substantially over the course of the process, turning negative in the later stages as Banco Sabadell's standalone market valuation strengthened materially. The offer-implied banking multiples, whilst providing a positive uplift over Sabadell's depressed market multiples in 2024, fell below the target's own contemporaneous multiples by 2025 and remained consistently below the peer group average throughout. These findings are consistent with the valuation disagreement framework established by Bradley (1980), Jennings and Mazzeo (1993), and Salva and Zhang (2022), and support the conclusion that Banco Sabadell's sustained resistance constituted a rational response to an offer that progressively failed to reflect the bank's market-assessed value. This study contributes to the literature on failed bank takeovers by providing a structured empirical illustration of the valuation disagreement hypothesis applied to a recent and fully documented case. The findings carry implications for SDG 8 (Decent Work and Economic Growth), insofar as the efficiency of the market for corporate control in banking, and the adequacy of pricing in bank takeovers, bears directly on the stability and competitiveness of financial systems as drivers of sustainable economic growth.