BBVA warns it could pull out of Sabadell bid if conditions are too harsh

By Jesús Aguado

SANTANDER, Spain (Reuters) -BBVA could withdraw its offer for smaller rival Sabadell if conditions imposed by the Spanish government are too harsh, or if it were forced to accept the sale of Sabadell's British unit TSB, Chairman Carlos Torres said on Monday.

Affirming that the plan was still to move ahead with the bid, Torres called for a clarification on the potential TSB sale, and said any such move amid BBVA's proposed 14 billion euro ($16.06 billion) hostile takeover would have to comply with Spanish legislation.

The Spanish government is set to decide on Tuesday whether to impose additional conditions on BBVA's offer before giving it its approval.

"If conditions are imposed on us that we do not consider appropriate, we have the option to withdraw, just as we have the option if there is a sale of a relevant asset that modifies the purpose of the offer," Torres said.

However, he added that it was too early to decide.

His comments come after Sabadell last week said it had received expressions of interest in TSB, which analysts say could be a defensive move to ward off BBVA's bid for Sabadell.

In Spain, legislation requires the governing bodies of a company targeted in a takeover bid to remain passive and request shareholder approval before promoting or taking any action that might prevent an acquisition from succeeding.

Torres said the bank was not planning to change the current terms of its offer, and that just a potential extraordinary dividend by Sabadell would lead to an adjustment.

The stock market supervisor is waiting for the government's decision before approving the formal bid, which BBVA would then follow with an offer. Sabadell shareholders would have 30 to 70 days to tender their shares.

Torres said he expected the acceptance period for the bid to start around mid-July.

($1 = 0.8715 euros)

(Reporting by Jesús Aguado, editing by Andrei Khalip and Jan Harvey)