Shares of TSB increased by over 10% after conditional dealings began at 8.00am this morning. Lloyds (LSE: LLOY) (NYSE: LYG.US) announced that the offer price had been set at 260p — which is around midpoint of the initial range — but that quickly sailed up to 290p during early trade.
Such was the level of demand from institutions and retail investors that Lloyds increased the amount of its stake for sale from 25% to 35%. Lloyds has to sell the whole of its stake by 2015, as required by European regulators on competition rules.
The Co-op Bank had originally planned to buy TSB branches but the deal crumbled after a £1.5bn black hole was discovered in the mutual conmpany’s balance sheet.
António Horta-Osório, the chief executive of Lloyds, commented:
“TSB has a national network of branches, a strong capital base, robust liquidity and significant economic protection against legacy issues. It is already operating on the UK high street and is proving to be a strong and effective challenger, further enhancing competition in the UK banking sector.”
TSB does not expect to pay a dividend until 2018, so it’s currently a growth stock rather than an income buy.
