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Banc Sabadell approves takeover of UK bank TSB for €2.4 billion after increasing capital by €1.6 billion

Last week, TSB announced Banc Sabadell's interest in purchasing all of the shares of the British bank, which is partially owned by Lloyd's. The board of the 6th largest bank in the United Kingdom then said they would welcome the Catalan bank's takeover bid, which they set at £3.40 per share (equivalent to €4.80). This meant that Banc Sabadell would buy TSB for £1.7 billion, or €2.4 billion. At that time, the Catalan bank denied any definitive agreement had been reached and simply confirmed that there were some talks in progress. A week later, Banc Sabadell has finally announced and approved the takeover bid, on the same terms released last week. In order to fund the transaction, the Catalan corporation will carry out a €1.6 billion increase in capital. This purchase will significantly strengthen Banc Sabadell's internationalisation, dramatically increasing its presence in the UK and in London's financial circles.

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20 March 2015 09:22 PM

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ACN

Barcelona (ACN).- Last week, TSB announced Banc Sabadell's interest in purchasing all of the shares of the British bank, which is partially owned by Lloyd's. The board of the 6th largest bank in the United Kingdom then said they would welcome the takeover bid of the Catalan bank, which they set at £3.40 per share (equivalent to €4.80). This meant that Banc Sabadell would buy TSB for some £1.7 billion in total, or around €2.4 billion. At that time, the Catalan bank denied any definitive agreement had been reached and simply confirmed its interest in acquiring the operation. However, a week later, Banc Sabadell has finally announced the purchase, which has been unanimously approved by its Board, chaired by Josep Oliu. It has also set the bid at the same terms as those released last week by TSB. In order to fund the transaction, the Catalan corporation will carry out a €1.61 billion capital increase (€1,607 million). Current shareholders will have a preference call in this capital increase.


On the day of Banc Sabadell's definitive announcement, the value of its shares increased by 4.48% on the stock market. Such a strategic purchase will significantly strengthen Banc Sabadell's internationalisation, dramatically increasing its presence in the UK and in London's financial circles.

This operation is in line with the Catalan bank's strategic plan for the 2014-2016 period, which focuses on increasing its presence in the overseas market. Currently, Sabadell has only a significant presence in Mexico and the United States. With the acquisition of the operation, the bank based in Greater Barcelona will go from having 5% of its assets overseas to having 22% outside of Spain, announced Jaume Guardiola, CEO of Banc Sabadell.

TSB is the UK's 6th largest bank with 4.5 million clients, €30 billion in assets and 8,000 employees distributed over 5 corporate centres and 631 branches. It is headquartered in Edinburgh and London. 

Sabadell offers a 31% increase on the value of TSB in 2014

TSB's Board, which is dominated by Lloyds (it owns 50% of the shares), is in favour of the takeover, announced Banc Sabadell. The Catalan bank will pay £1.7 billion for all the shares of the UK bank. The final price per share (3.40 in British pounds) represents a 31% increase on what TSB was trading at in June of last year. The Catalan bank can formalise its offer as of this Friday and within the next 28 days. 

As proof of the TSB Board's agreement with the transaction, Banc Sabadell will immediately get 9.99% of TSB's shares the moment it formalises its takeover bid. TSB has also expressed its "irrevocable commitment" to accept the offer and sell the additional 40.01% of the shares within the next few days. This would represent 50% of the UK bank's shares, which is the part entirely owned by Lloyds. Then, other shareholders will have to agree to sell their part, increasing Banc Sabadell's ownership of TSB.

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  • Barcelona stock exchange (by O. Campuzano)

  • Barcelona stock exchange (by O. Campuzano)