Bank of Scotland Increases Takeover Bid for NatWest

Strategic Insights -

The Bank of Scotland has upped its takeover bid for NatWest just five hours before the midnight deadline for final offers, increasing its offer to £24.1 billion. The new bid, which comprises 1.75 of its shares and 356p in cash, outstrips the improved bid unveiled by rival Royal Bank of Scotland on Monday by more than £1 billion. The Bank of Scotland offer also includes special stock units, which were introduced into the bid last week, providing shareholders with more flexibility in their acceptance.

Key Takeaways:

  • The Bank of Scotland's new bid for NatWest is valued at £24.1 billion, a 21.2% increase over NatWest's closing stock market price yesterday.
  • The bid comprises 1.75 of Bank of Scotland's shares and 356p in cash, outstripping Royal Bank of Scotland's improved bid by more than £1 billion.
  • Shareholders have the option to take part of the offer in special stock units, introduced into the bid last week.
  • The special stock units provide shareholders with a bonus issue of additional value shares, paying out dividends over the next three years guaranteed to total £1 per share.
  • Royal Bank of Scotland has increased its bid to £23.6 billion, offering £3.5 billion more than its previous bid, but NatWest has branded the offer "a damp squib and a risky one".
  • Bank of Scotland's Governor, Mr John Shaw, claims the offer is the most valuable and straightforward.
  • The takeover battle has left fund managers still wondering whether there is enough in the two bids to justify the risk of a major merger.

Statistics:

  • The Bank of Scotland's new bid is valued at £24.1 billion.
  • The bid comprises 1.75 of its shares and 356p in cash.
  • The improved bid rate is £14.41 per NatWest share, outstripping RBS's improved bid by more than £1 billion.
  • The Bank of Scotland offer is 5.2% higher than the value of RBS's bid at the close of trading.
  • The bonus issue of additional value shares will pay out £1 per share over the next three years.
  • RBS's Spanish shareholder, Banco Santander Central Hispano, will stump up around £500 million for shareholders opting for the 450p cash alternative offer.

Sources:

*

"Bank of Scotland increases takeover bid for NatWest", The Scotsman (date not provided)

"Royal Bank of Scotland increases bid for NatWest", The Scotsman (date not provided)

"Commerzbank analyst believes NatWest may still remain independent", The Scotsman (date not provided)