Spanish banking group to purchase TSB in £1.7bn deal

Spanish banking group to purchase TSB in £1.7bn deal

Lloyds Banking Group has today (20 March) confirmed the sale of TSB, the rival banking group spun out as a result of a European competition ruling in which it holds a 50 per cent stake, to Banco de Sabadell in a deal worth £1.7bn.

In a statement Lloyds confirmed it is selling a 10 per cent interest in TSB Banking Group initiatially for £170m, with a deal entered into to sell the remaining stake at the same 340 pence per share price reaping a further £680m.

On 12 March, TSB confirmed that it had received the takeover proposal from Sabadell.

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Under the offer, Sabadell will acquire the entire issued and to be issued share capital of TSB. Shareholders will receive 340 pence per share in cash for each TSB share, which remains to value the entire share capital of TSB at £1.7bn, with the sale is expected to complete on 24 March.

The offer is conditional upon the Prudential Regulation Authority consenting to the acquisition, alongside anti-trust clearance from the European Commission.

The transaction will lead to a charge through Lloyd’s Banking Group’s income statement of approximately £640m, with net proceeds reflecting additionally a payment for a service agreement between the two banks as well as a contribution from Lloyds to move to a new IT system.

António Horta-Osório, group chief executive of Lloyds Banking Group, said: “This is a significant and positive step for the group and will enable us to meet our commitments to the European Commission, well ahead of its mandated deadline.”