20th March 2015
TSB has agreed to a £1.7 billion takeover bid by Spanish bank Sabadell but stockmarket gains for the formerly Lloyds-owned bank have been modest.
The announcement of a takeover comes less than a year after TSB listed on the stock market after being spun out of Lloyds, which was forced to dispose of assets under its financial crisis bailout terms.
The deal represents a price of 340p per share.
The deal will see Lloyds sell its remaining 50% stake in TSB to Sabadell if the takeover is agreed by the UK’s Prudential Regulatory Authority, the European Commission and TSB shareholders. Sabadell shareholders will not get a say on the deal.
TSB confirmed that Sabadell would continue to operate the challenger bank brand in the UK and that its new owners would support and speed up its ‘retail growth strategy’.
However, modest stockmarket movements – TSB shares rose 2% to 333p this morning – could be a reflection of some uncertainty about whether the deal will go through .
Shore Capital analyst Gary Greenwood believes there is a ‘very low probability of failure’
‘We expect ownership by Sabadell to enhance TSB’s competitive position in the UK banking market, which is likely to be welcomed by the UK government and competition authorities, albeit this may therefore be to the detriment of the existing large incumbents,’ he said.
‘It is also likely that TSB will be used as a platform for Sabadell to make further acquisitions in the UK, thus further increasing its scale and competitive position.’