What the TSB takeover means for investors

Otmane El Rhazi from Mindful Money » Shares.

Now that the £1.7 billion cash takeover of TSB by Banco de Sabadell has been approved by regulators, Hargreaves Lansdown explains what the deal means for investors…

TSB shares are expected to delist from the London Stock Exchange on or around July 28, 2015. For TSB shareholders who have accepted the takeover offer, there is nothing to do; they will receive 340p for every TSB share owned.

In addition, private investors who bought TSB shares during the IPO, and have held their shares continuously, will receive an additional cash payment in lieu of their bonus share entitlement. Bonus shares were available on the basis of one share per ever 20 allocated up to a maximum of £100 worth of bonus shares rounded down to the nearest whole share (max 38 shares).

The cash for the takeover is expected to be paid out by July 14 and the cash for bonus shares by July 17.

Investors who have not yet accepted the offer have a decision to make. If they wish to accept the offer, they can still do so. TSB will give 14 days notice when the offer will close.

WARNING – Investors who do not accept the offer may be left with unlisted shares. If Sabadell gains acceptances totalling at least 90% of the TSB shares in issue then it has the right, which it will take up, to compulsorily purchase all of the remaining shares in issue. If Sabadell does not receive sufficient acceptances then, following delisting, investors will hold an unlisted share and it may be difficult to realise any value from their holding in future.

Investor profits

The IPO share price was 260p and the takeover price 340p. Here are some examples of profits assuming TSB shares bought at IPO and held until now:

 

Application value	Shares allocated	Total cost	Bonus shares	Total shares	Cash proceeds	Profit
£750	288	£748.80	14	302	£1,026.80	£278.00
£1,000	384	£998.40	19	403	£1,370.20	£371.80
£1,500	576	£1,497.60	28	604	£2,053.60	£556.00
£2,000	769	£1,999.40	38	807	£2,743.80	£744.40
£2,500	826	£2,147.60	38	864	£2,937.60	£790.00
£3,000	884	£2,298.40	38	922	£3,134.80	£836.40
£5,000	1115	£2,899.00	38	1,153	£3,920.20	£1,021.20
£10,000	1692	£4,399.20	38	1,730	£5,882.00	£1,482.80