Quick firming up of recommended deal after Sabadell last week confirmed its GBp 340 cash per share approach for TSB. Although some people were getting excited on potential rival interest for TSB, the current agreement between Sabadell and TSB largest 50% shareholder Lloyds (through 10% stake acquisition, call option on 20% stake and hard irrevocable) makes itextremely difficult (quasi impossible) for rival interest to materialize.

Low conditionality deal as (i) no regulatory risk as TSB being a small 4-6% market player and bidder Sabadell not active at all in UK mortgage market & Sabadell remains well capitalized after rights issue financing; and ii) 75% minimum acceptance can be waived down to 50% and SAB has already the 50.01% irrevocable from Lloyds.

Jun/Jul-15 closing. 25% break downside. Rate of return trade. Nothing to be done here  – one to consider around GBp 330 or 10% pa on Jul-15 closing.