Standard Life, one of Alliance & Leicester’s largest shareholders believes the bank is being sold to Abbey National owner Santander at a “giveaway” price.
Santander’s offer represents a 36 per cent premium to A&L’s share price on Friday, but it’s still well below the stock’s 1200p peak a year ago.
Despite assurances from A&L chief executive David Bennett that the bank did not need to quick fire sale in order to survive, it could not have come at a more fortunate time
The bank’s share price had tumbled by two thirds since Santander chairman Emilio Botin said in February he would not make a bid for the bank because he was “delighted with Abbey’s growth.”
And A&L’s depressed share price must have been too tempting to resist.
“Santander has taken full advantage of the banking sector’s depressed price but to A&L’s benefit it also brings a stronger balance sheet as it’s suffered substantial write downs and there are concerns that it will be hit by rising unemployment and repossessions in a slowing market,” said Charles Stanley analyst Nic Clarke.
KBW analyst Mark Phin agrees. he said Santander’s offer and its promise to retain the dividend will add some “bedrock” to A&L’s share price.
Analyst Views: Will Santander’s offer flush out other bidders?
David Cumming (Standard Life Investiments): This is a gorgeous deal for Santander. Given the potential integration benefits, other banks must surely be reviewing their options. I would be amazed if no one else counters with a higher offer in the next few months.
Nic Clarke (Charles Stanley): I think other offers will be less likely given the aggressive announcement and the fact it has been agreed by the board. It would have to be a substantial improvement on the current offer for them to change their minds.
Simon Denham (Capital Spreads): A&L looks to be doomed but you never know who will be the eventual acquirer. A Far East Player, Sovereign Wealth Fund or perhaps a Russian interest looking for a relatively inexpensive route to the UK might be tempted.