In Topic 10 of the book I look at the key finance topic of mergers and acquisitions. Today we have another perfect example of this form of activity with Lloyd's TSB firming up plans for the takeover of HBOS. Under the revised deal every HBOS shareholder will now get 0.605 Lloyd's share for every HBOS share. This is much less than the earlier offer of 0.833 and the initial offer of a one-for-one share swap. It is clear that HBOS is not worth anything like what it was a few weeks ago. Most attention has been focused on the Lloyd's announcement that the deal would save the combined group (to be known as Lloyd's Banking Group) over £1.5bn per year. These so called "synergy" savings are likely to be the result of many job losses. The banking crisis will soon start to impact heavily on those employed in the sector.
Nov 3, 2008
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The serious concern is that, the takeover would result in the job losses face by HBOS employees. In addition, the shareholders will be paid less per share as shares loss on value since initial offer has been made. The loss on share was nearly 40 %, this could give indication that HBOS was in serious financial position.
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