Lloyds was quick to show its approval of Spanish lender Banco Sabadell's bid for TSB and rightly so. The 360p a share offer which has been put on the table represents a small premium to the UK bank's book value. Indeed, the nearly one- third jump in the shares on the back of the announcement shows investors have greeted the Spaniards with open arms. However, the arguments in favour of the deal for Sabadell's shareholders are less clear.True, it has a good track record of successfully acquiring and integrating rivals. Even so, the biggest cost savings are expected to accrue from migrating TSB to its IT systems, but it is not clear that alone can justify the purchase. As well, analysts at Macquarie estimate that adding TSB could force it to carry out an equity issue of between €1.1bn to €1.2bn to compensate for the 150 basis point reduction in Sabadell's capital buffers as a result of the tie-up. Furthermore, one of the stock's main attractions was precisely the fact that it was one of the purer plays on the Spanish recovery. To take note of, the bank's return on equity was already an unimpressive 5.6%. Nobody saw the TSB bid coming. There is a reason for that, muses the Financial Time's Lex column.Engineering group Fenner is worth keeping tabs on given what it can tell investors about the state of both the world mining cycle and the oil and gas sector. The outfit manufactures conveyor belts for the former and seals for the latter. Both are heading in the wrong direction, the firm has indicated. Orders from the Australian mining industry are trending lower following months of downwards pressure on prices.That has led some firms to finally go ahead and take out some production. In recent weeks, orders from oil and gas companies have also fallen off more quickly than was expected. Fenner has tried to compensate by cutting costs but that can only go so far. Nonetheless, while the shares are trading on 11 times earnings they do offer a dividend yield well north of 6%, providing a measure of support, even if any recovery still looks muted, says The Times's Tempus.
Last checked at 
