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Bank of Scotland's Hostile Bid for National Westminster Faces Referal Decision

Strategic Insights

— 1 min read

Business Secretary Stephen Byers is set to decide by the end of next week whether to refer Bank of Scotland's (BoS) hostile bid for National Westminster (NatWest) after receiving advice from the Office of Fair Trading (OFT). The OFT has passed its detailed report on the bid to the Department of Trade and Industry, which must publish its decision by 3 December. If the bid is cleared, the Takeover Panel will restart the stalled offer timetable, forcing NatWest to issue its final defence document within two days. This development could also prompt Royal Bank of Scotland to consider a counter bid for NatWest, as it reviews the competition implications of such a move.

Key Takeaways:

  • The Trade and Industry Secretary, Stephen Byers, will decide by the end of next week whether to refer BoS's hostile bid for NatWest after receiving advice from the OFT.
  • The OFT has passed its detailed report on the bid to the Department of Trade and Industry, which must publish its decision by 3 December.
  • If the bid is cleared, the Takeover Panel will restart the stalled offer timetable, forcing NatWest to issue its final defence document within two days.
  • Analysis suggests there are no real competition grounds for a referral of either the BoS or the Royal bid.
  • However, a referral cannot be ruled out due to the current political climate and the Government's intense interest in the banking sector.
  • A referral would be a major blow to BoS and the Royal as it would force both to lapse their offers for NatWest.
  • Analysts believe the Competition Commission would ultimately clear both bidders, but the delay could give NatWest the opportunity to escape their clutches.
  • The delay could also allow NatWest to pursue its own restructuring strategy, which involves cutting thousands of jobs and selling off under-performing subsidiaries.

Statistics:

  • BoS's cash and shares offer for NatWest is valued at 1319p.
  • NatWest's shares closed up 20p at 1357p.
  • BoS's shares closed up 16.5p at 749.5p.

Sources:

  • "UK business news" article, The Guardian
  • "Business news" article, The Times

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