By Elena Vardon


Banco Bilbao Vizcaya Argentaria doesn't have room to sweeten the economic terms of its proposal to merge with Banco de Sabadell and the market's reaction to the bid prevented further improvement, according to an email from the Spanish lender's chairman shared by Sabadell.

Sabadell on Wednesday said its chairman was contacted on May 5--the day before it rejected the offer saying it significantly undervalues its potential--and is making the written exchange public to "ensure that the market has complete and transparent information."

On May 1, BBVA put forward a deal to merge with its smaller peer under which it would offer one new BBVA share for every 4.83 Sabadell shares.

"In our proposal we have already used up all the room we had, after having maintained a premium of 30% despite the large relative increase of your shares from mid-April to 29 April," the email from BBVA reads.

BBVA's chairman also said that it can't pay more premium than it is already offering given the drop in the value of its shares since the merger interest emerged last Tuesday, which it says has caused its market capitalization to fall over 6 billion euros ($6.45 billion). "If we were to do so it is foreseeable that our value would fall again," he wrote.

At market open, Sabadell shares fell 2.8% while BBVA's rose 2.0%.


Write to Elena Vardon at elena.vardon@wsj.com


(END) Dow Jones Newswires

05-08-24 0322ET