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Carlos Torres is confident the Spanish bank’s €10bn pursuit of its smaller rival will succeed

The chair of Spanish bank BBVA has declared that its hostile bid for rival Sabadell is “unstoppable” and should have little trouble overcoming regulatory or political challenges.

The biggest European banking deal of the year is entering a crucial stage, with BBVA shareholders due to vote on raising additional capital to support the €10bn all-share tender offer at an emergency meeting next week. 

In an interview with the Financial Times, BBVA executive chair Carlos Torres said the Sabadell board had been wrong to reject his bank’s friendly approach last month. “They say it’s about the economics . . . but I think they’re kidding themselves,” he said. 

“They have that self-confidence and they believe that they can continue to create value and maybe integrating with BBVA they might view as a bit of a cold shower. I can empathise with that, but it’s not the right answer.”

He added: “This is a great offer. It’s a knockout offer. It’s an amazingly rich offer.” 

If the vote on BBVA raising additional capital is approved, the bank must then wait for European and Spanish regulators to give its takeover bid the green light or demand any remedies to address competition concerns.

The next stage would be to open the tender offer to Sabadell shareholders, who must sell more than 50 per cent of the smaller lender’s shares for BBVA to succeed in its pursuit.

The final step in the process comes with complications: Spain’s Socialist-led government must rule on the merger of the two entities and has said it will veto the tie-up even if BBVA already owns Sabadell. Even if BBVA prevails, the deal is unlikely to be completed until mid-2025.

Torres first approached Josep Oliu, his opposite number at Sabadell, in mid-April and the offer is based on a 50 per cent premium on Sabadell’s share price at that point. Since then, Sabadell’s shares have risen 28 per cent and BBVA’s have dropped 6 per cent, reducing the premium to just 7 per cent.

The BBVA chair said Sabadell’s share price rise reflected investor expectation that his bank’s bid would succeed.

However, a person close to Sabadell said the long bidding process made that outcome uncertain.

“The overwhelming opposition to the transaction from almost every stakeholder group shows this is far from a done deal,” they added. “The impact of any transaction on competition in an already concentrated market in Spain is front of mind for stakeholders.”

Proxy advisers ISS, Glass Lewis, Corporance and Pirc have all recommended BBVA investors vote in favour of the capital increase at next Friday’s EGM, though each qualified their support by saying the hostile bid — a rare move in Spain — created uncertainties around the deal being completed.

Torres said he had received support from BBVA’s shareholders for the takeover, including those investors that also held stakes in Sabadell. “The value of Sabadell is relying entirely on the value of our offer,” he said

The next stage in the process would be for the European Central Bank and Spain’s market regulator to give their approval, which is expected as no solvency issues are involved.

Spain’s antitrust watchdog must also weigh in on the deal and Torres said he expected that any amendments requested for competition reasons would be acceptable.

Carlos Cuerpo, Spain’s economy minister, has however listed competition issues among the government’s concerns, along with worries over employment, financial stability and even Spain’s “territorial cohesion”.

While the government has the final say on the merger, Torres said: “We’re confident that we can work together in addressing those concerns.”

“The transaction makes sense for Spain, for Europe,” he added, pointing out that just two of the world’s 20 biggest banks by market capitalisation were from Europe — HSBC and UBS — and neither of which were in the EU. 

“That’s why we’re quite confident this is a train that’s unstoppable and this will happen. Not just because it’s good for shareholders, but it’s good for clients and it’s good for society as well,” he said.

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The Microsoft co-founder breaks down his climate investments

It is the blessing that can help determine a climate startup’s fate: backing from Bill Gates, one of the biggest investors in efforts to transform the world’s energy use.

Since 2015, Breakthrough Energy, the climate-investment firm founded by Gates, has lavished $2.2 billion on more than 160 startups and other initiatives, seeking both returns for investors and emissions reductions. He has also made investments separately outside the firm.

Some of those startups are pursuing relatively straightforward solutions, such as sealants that make heating systems more efficient. Others are working on ideas that might sound far-fetched, such as burying plant waste to remove carbon dioxide from the atmosphere.

In an interview, the Microsoft co-founder looked at the road ahead for the young companies he has invested in.

The startups poised to emerge as early winners

The surest bets, Gates said, are the companies that find ways to make existing systems more efficient. “They are, in a sense, just making a better product,” Gates said.

Among the examples he cited was TS Conductor, which makes a power cable that weighs less and carries more electricity than conventional wires. That lets utilities add power to congested grids without building new transmission lines.

As demand for TS Conductor’s technology grows rapidly, a company representative said it is deciding where to put a new U.S. manufacturing site with 10 times the capacity of its first one in Southern California.

Another startup Gates cited is Aeroseal, which identifies leaks in heating and cooling systems, then releases sealant-containing mist to plug them. The technology has been used in hundreds of thousands of homes and more than 10,000 commercial buildings, according to the company.

Gates also predicted success for KoBold Metals, a mineral-exploration company that uses artificial intelligence to identify deposits of metals used in batteries, power lines and other gear needed for the energy transition. KoBold said this year it discovered a vast copper deposit in Zambia after conducting drilling tests at the site since 2022.

Many startups still need to reduce costs

A big reason many green technologies aren’t catching on more quickly is that they cost more than the polluting option.

“The Breakthrough Energy theory is to get to a point where there is no green premium,” Gates said.

That isn’t the case yet for green hydrogen, which could help decarbonize steelmaking and other industries that rely heavily on fossil fuels. Green hydrogen is made by splitting water using renewable electricity, but still costs far more than hydrogen produced from natural gas.

Electric Hydrogen, a Gates-backed startup that says it has developed a better electrolyzer, which splits water, is among those trying to bring costs down. The company raised $380 million from BP, United Airlines and others last year and opened a factory in Massachusetts this spring.

One area where Gates said the cost gap is narrowing is heat batteries, which convert electricity into heat for industrial processes. Rondo Energy, backed by Breakthrough, is working with Diageo, the liquor company, at sites in Kentucky and Illinois and this week announced deals in Europe.

Some investments are far from paying off

It will likely be many years before some technologies can be commercialized, but Gates said his investing approach is “unusually patient.”

Since 2008, for example, he has poured more than $1 billion into TerraPower, a company he founded to develop nuclear reactors that are smaller and cheaper than conventional nuclear power plants. TerraPower recently broke ground on its first project in Wyoming, which the company hopes will come online in 2030.

“As long as that looks promising to me, I’ll make sure that it’s financed,” he said.

Those next-generation reactors aren’t the biggest long shot in Gates’s portfolio. Breakthrough has also backed startups working on nuclear fusion, which could theoretically provide abundant carbon-free power. But even optimists agree that the first fusion power plant is years away.

Gates called it “maybe the hardest thing we work on.”

Startups working to remove carbon dioxide from the air are also still in their relatively early stages. The methods include giant fanlike machines that suck carbon from the air, and the spreading of carbon-absorbing rocks on soil. Gates said he pays $600 per metric ton of carbon dioxide to offset his emissions; Breakthrough has backed a startup that says it can remove carbon for less than $100 a ton by burying plant waste.

Gates said costs will need to fall further for carbon removal to play a major role in curbing climate change.

A bet that didn’t work out

Delays, setbacks and failures aren’t surprising when trying to develop new technologies. One disappointment for Gates came in May with the chapter 11 bankruptcy of Ambri, a developer of liquid-metal batteries.

Ambri is one of many startups trying to develop cheaper or longer-lasting alternatives to lithium-ion batteries, which power electric vehicles and store wind and solar power for when it is needed on the grid.

An Ambri spokesman said the company is on course to exit bankruptcy next month and will push to license its technology after it didn’t secure enough investment for its manufacturing plans. Gates is part of a creditor group that is on course to acquire the company out of bankruptcy.

Gates, who invested through his Gates Frontier firm, said Ambri didn’t bring down costs as hoped. He predicted that most startups in that area will struggle to gain traction.

“Given the large number of battery companies, the majority of those technologies will be outcompeted,” he said.