Lloyds TSB to Respond to Abbey National's Rejection of £18.5 Billion Bid

Strategic Insights -

Lloyds TSB is expected to issue a robust response today to Abbey National's rejection of a second informal bid valued at £18.5 billion. The rejection comes after a proposed merger between Abbey and Bank of Scotland (BoS) was reportedly progressing well. Lloyds' initial offer, made last week, was 1.42 shares plus 220p in cash for each Abbey share, valuing the bank at about £12.6 billion. Abbey's chief executive, Ian Harley, stated that the board's unanimous rejection was made with regard to shareholder value, deliverability, and regulatory risk.

Key Takeaways:

  • Lloyds TSB will issue a robust response to Abbey National's rejection of a £18.5 billion bid.
  • The rejection follows a proposed merger between Abbey and Bank of Scotland (BoS), which was reported to be progressing well.
  • Lloyds' initial offer was 1.42 shares plus 220p in cash for each Abbey share, valuing the bank at about £12.6 billion.
  • The offer was 31% above Abbey shares traded on November 2, the day before the London-based firm announced its approach to Bank of Scotland.
  • Abbey's chief executive, Ian Harley, cited shareholder value, deliverability, and regulatory risk as reasons for the board's rejection.
  • Lloyds may be forced to increase its offer again or consider a hostile takeover.
  • The deal would create a significant rival to the UK's four big high-street banks, with a 22% share of the UK mortgage market and a 27% share of Britons' current accounts.
  • Banking analysts expect Lloyds to appeal directly to shareholders to detail the reasons why it considers its deal superior to the proposed tie-up between Abbey and BoS.

Sources:

  • "Abbey rejects Lloyds bid in row", The Times, November 23, 1999.
  • "Lloyds TSB valued Abbey National at £18.5 billion in bid", The Guardian, November 23, 1999.

Statistics:

  • £18.5 billion: the value of Lloyds' bid for Abbey National.
  • £12.6 billion: the value of Lloyds' initial offer for Abbey National.
  • 1.42 shares: the number of Lloyds' shares offered for each Abbey share.
  • 220p: the cash portion of Lloyds' offer for each Abbey share.
  • 8000: the number of jobs Lloyds plans to cut by cutting areas of duplication with Abbey National (earlier reports said 30,000 jobs were under threat).
  • 22%: the share of the UK mortgage market a merged Abbey and Lloyds bank would have.
  • 27%: the share of Britons' current accounts a merged Abbey and Lloyds bank would have.