Private fairness group Cerberus ordered to pay Sabadell €400mn | USAEMALL.com

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Private equity group Cerberus has been ordered to pay Sabadell more than €400mn after a judge in London found in favour of the Spanish bank in a dispute over a soured multibillion-euro property deal.

Sabadell had sued Cerberus over claims the US group failed to pay what it owed for its purchase about five years ago of distressed Spanish property portfolios.

The case was among the highest value before the High Court and came in the middle of Sabadell seeking to fend off a hostile €11bn takeover bid from its larger Spanish rival BBVA.

The dispute has its origins in a push that Sabadell made to reduce its exposure to Spanish property in the aftermath of the financial crisis, which hit the country hard and triggered a wave of foreclosures.

Sabadell agreed to sell an 80 per cent interest in three portfolios to Cerberus in a 2019 deal that covered a range of assets including offices, warehouses, and apartment blocks.

Under the deal, Sabadell agreed that 20 per cent of the payment would be deferred, because some of the properties were “unregistered”, meaning their ownership status had not been confirmed with the Spanish land registry.

Sabadell’s agreement with the private equity group meant that part of the payment was contingent on the bank subsequently registering properties with the land registry.

But the two sides subsequently disagreed about how the contract had been worded — in particular, what sums were due if a value threshold for the properties that remained unregistered was not met.

In a ruling on Wednesday, the judge Mr Justice Andrew Baker found that Sabadell was entitled to €358mn plus interest of €47mn and costs of £3mn.

Cerberus said it was “disappointed” by the ruling. It said it would “of course abide by the terms of the judgment” but was “considering its options to appeal”.

The group said it believed the court “failed to take into account, and failed to properly interpret, the conduct of the parties and material provisions in the governing investment agreements”.

Sabadell said it welcomed the ruling, which it said would have a “positive impact for the bank in terms of lower NPLs [non-performing loans], reduced provisions and higher coverage”.

“This will contribute towards a further improvement in the bank’s asset quality and risk profile”.

BBVA’s mooted takeover of Sabadell has consumed the attention of the bank’s leaders since it was launched in April and became more protracted last month when Spain’s antitrust regulator said it would subject the deal to an in-depth competition review.

That decision scotched BBVA’s hopes of making a formal tender offer to Sabadell shareholders before the end of 2024. BBVA declined to comment on the court ruling.