TSB share price skyrockets as bank confirms takeover talks with Spain’s Sabadell

Shares in TSB Banking Group Plc (LON:TSB), the challenger bank spun out of Lloyds Banking Group Plc (LON:LLOY), have jumped more than 25 percent in London this morning after the mid-cap lender confirmed media speculation that it was in takeover talks with Spain’s Banco de Sabadell SA.

As of 09:48 GMT, TSB’s share price had gained 26.09 percent to stand at 333.00p. Shares in Lloyds, which holds a 50-percent stake in the challenger bank, are also in demand, having added 1.74 percent to 79.52p.
TSB said in a statement today that it had received a preliminary proposal from Sabadell for 340p per share in cash and that the company’s board had indicated to the Spanish bank that it would be willing to recommend an offer at the proposed price.
“Based on preliminary discussions, the Board of TSB believes that Sabadell could support and accelerate TSB’s retail growth strategy and accelerate the expansion of TSB’s presence in the SME sector,” the FTSE 250 lender said in the statement.
The challenger bank’s statement came after Sky News earlier today reported that the Spanish lender had approached Lloyds’ board.
The takeover offer comes less than a year after TSB’s float on the London Stock Exchange which valued the business at £1.3 billion or 260p per share. Prior to today’s surge, TSB’s share price had been hovering around the float price.
Analyst Mike Van Dulken, head of research at Accendo Markets, told City A.M. that majority shareholder Lloyds could still put a stop to proceedings.
“With Lloyds still holding a 50 per cent stake in TSB, it will have a deciding vote on any offer – but with the UK government still holding around 23 per cent in Lloyds itself, it may also have a say in the matter given its aim of recouping its bailout investment.”
Part government-owned Lloyds was ordered by European regulators to sell TSBas a condition of its bailout during the financial crisis.
As of 10:34 GMT, Thursday, 12 March, TSB Banking Group PLC share price is 264.25p.