Santander to acquire TSB, strengthening its UK presence
Why we think this is very good
The acquisition of TSB by Santander is a positive development that will significantly strengthen the company's position in the UK market. The transaction is expected to be accretive to earnings per share from the first year and contribute around 4% by 2028, while also improving Santander UK's return on tangible equity to 16% by 2028. The acquisition is well-structured, with a clear path to value creation through cost synergies and operational efficiencies. Santander's proven track record of successful banking platform migrations and integration capabilities further bolster the positive outlook for this transaction.
Key Points
- Santander to acquire TSB Banking Group plc from Banco de Sabadell, S.A. for £2.65 billion in an all-cash transaction
- The acquisition will strengthen Santander's position in the UK, making it the third largest bank by personal current account balances
- The combined business will serve nearly 28 million retail and business customers nationwide
- The transaction is expected to generate cost synergies of at least £400 million pre-tax and be accretive to Santander's earnings per share from the first year
Summary
Santander has reached an agreement to acquire 100% of TSB Banking Group plc (TSB) from Banco de Sabadell, S.A. for £2.65 billion in an all-cash transaction. The acquisition will strengthen Santander's position in the UK, allowing it to become the third largest bank in the country by personal current account balances. The combined business will serve nearly 28 million retail and business customers nationwide. The transaction is expected to generate cost synergies of 13% of the combined business's cost base, equivalent to at least £400 million pre-tax, and be accretive to Santander's earnings per share from the first year and contribute around 4% by 2028.