By Jesús Aguado and Andres Gonzalez
MADRID/LONDON (Reuters) -Spanish bank Sabadell has lined up advisers to assess its options after rival BBVA (BME:BBVA) unveiled a 12 billion euro ($12.83 billion) takeover offer, sources said on Thursday, as shares in Sabadell extended gains on the proposed deal.
BBVA said this week that it had approached its smaller rival with an all-share offer, nearly four years after previous talks on a merger between Spain's second and fourth-largest lenders collapsed.
The deal would create a Spanish bank with assets of nearly 1 trillion euros and a market value rivalling Santander (BME:SAN), as well as helping BBVA diversify away from emerging markets like Mexico.
BBVA said it was ready to "move forward immediately with the transaction" and Chairman Carlos Torres in a letter called on Sabadell's board to give its assessment of the proposal as soon as possible.
In response, Sabadell said it was up to its board to examine the offer. The board is expected to meet in the coming days, a source familiar with the matter said.
To advise on the next steps, Sabadell has enlisted Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS), three sources familiar with the situation told Reuters. The banks declined to comment.
BBVA's all-share offer of 1 new BBVA for every 4.83 Banco Sabadell shares is at a 30% premium to both banks' share prices as of the close on April 29, and based on those prices it valued Sabadell at more than 12 billion euros.
Shares in Sabadell rallied another 5% on Thursday as Spain's stock market reopened following a holiday, but the shares remain well below the premium price.
"We see no possibility of an improved offer from BBVA if Sabadell rejects the proposal. If BBVA were willing to pay part of the transaction in cash, it could be a move that would pave the way for closing the merger," Renta 4 analysts said.
BBVA's own shares slipped by 2.9% on Thursday, and were down nearly 10% from Monday's close.
In a note, Deutsche Bank (ETR:DBKGn) analysts saw the premium as "attractive enough", but not "outstanding".
"We do not see much value added for BBVA in this deal, in spite of making strategic sense. It looks difficult to reach that 20% return on investment announced," they added.
The potential merger follows a period of consolidation in Spain's banking sector as lenders seek scale by cutting costs. The country now has 10 banks, down from 55 before the 2008 global financial crisis.
Morningstar equity analyst Johann Scholtz estimated that the merger would boost BBVA's share of Spain's deposits market to around 23% from 15% now, just behind Caixabank at around 25% and ahead of third-placed Santander at 22%.
($1 = 0.9353 euros)