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November 3, 2008

Lloyds TSB / HBOS deal may face counter bid

by Gill Montia

Story link: Lloyds TSB / HBOS deal may face counter bid

The Government-approved merger between HBOS by Lloyds TSB could be under threat, as news of a possible rival bid emerges.

Scottish businessman and former HBOS executive, Jim Spowart, has reported he has been approached by an international finance company with an interest in acquiring HBOS.

According to Mr Spowart, the company has already made an approach to the Treasury and ministers have confirmed that they will not involve themselves in any challenge to the Lloyds TSB deal.

The interested party is now mulling over its position, having not yet made an approach to HBOS.

A merger with HBOS is extremely attractive to Lloyds TSB because it would create the largest retail bank in the UK.

When HBOS’s share price began to plummet in mid-September, the Government waived Competition Commissions rules to enable a rescue and the combined businesses would control around one-third of the UK mortgage market and hold over £300 billion in retail deposits.

However, HBOS shareholders are far from content because the original terms of the deal were revised several weeks later, after HBOS’s share price slumped further.

Under the current arrangement HBOS shareholders, who have yet to vote on the merger, will receive 0.833 Lloyds TSB shares for every HBOS share held.

Meanwhile, members of the Scottish Parliament have voiced strong opposition to a takeover by Lloyds TSB, largely because of fears over job losses.

 

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