MADRID, June 10 (Reuters) - BBVA's Chair Carlos Torres on Monday urged shareholders to participate in an extraordinary meeting on July 5 called to approve a share issue to fund its 12-billion-euro ($13 billion) hostile takeover bid for smaller rival Banco Sabadell.

The bank has offered one newly issued BBVA share for every 4.83 in Sabadell, representing a premium of 30% over Sabadell's April 29 closing price of 1.73750 euros, valuing the bank at 12.28 billion euros. On that day, BBVA shares closed at 10.9 euros each.

BBVA wants to issue 1.126 billion new shares, which at current market prices of 9.778 euros, would value Sabadell around 11 billion euros, 6.6% higher than now.

"As a shareholder, your involvement in the bank's decision-making is essential, and I would like to encourage you to participate in this shareholders' meeting," Torres said in a video message.

Among BBVA's more than 726,000 shareholders, 62.8% are institutional investors, while the rest are retail shareholders.

Last month, BBVA turned hostile after its smaller rival rejected its initial offer.

The offer is subject to it acquiring more than 50.01% of Sabadell, the approval of the shareholders and other regulatory authorisations and that could take between six to eight months.

Sabadell has told its retail shareholders the bank has "excellent prospects" alone and that they may not need to make a decision about BBVA's takeover attempt until 2025. (Reporting by Jesús Aguado; Editing by Emelia Sithole-Matarise)