Alliance & Leicester snapped up as bid fever returns to the City
A frenzy of merger and acquisition activity, spearheaded by Spanish bank Santander agreeing to buy Alliance & Leicester for £1.3bn, returned to the markets yesterday causing stocks to rally.
The oil and gas sector was the centre of much of the bid action, with Imperial Energy, the developer of Russian oil reserves, soaring 18 per cent to 910p after it confirmed it was the subject of a takeover approach; and mining company Kazakhmys jumping 6.2 per cent to 1515p on reports that a bid from Russia’s Metalloinvest is imminent.
A line was finally drawn under the battle for Anheuser-Busch, with the Budweiser brewer agreeing to be taken over by Belgian rival InBev for $70 a share.
Royal Dutch Shell made its first takeover bid in two years, launching an agreed $5.87bn offer for Canadian gas company Duvernay Oil.
Shares in ITV surged 12 per cent to 42.9p after independent TV production company Endemol refused to rule out a bid and bookies Ladbrokes rose as much as 8 per cent on rumours of bid interest from Ireland.
But it was Alliance & Leicester (A&L) which was the biggest mover, with the lender rising 53 per cent to 335p after it confirmed the approach from Santander.
A&L’s board unanimously recommended that its shareholders approve the 299p a share offer following a weekend of talks to secure the deal. “The board unanimously backed the deal. We wanted to provide shareholders and customers with some certainty in uncertain times,” A&L chief executive David Bennet said.
Santander will inject £1bn of new capital into A&L and eventually merge it with Abbey National, which Santander bought in 2004. It is also likely that Santander will restrict lending by reducing A&L’s £42bn mortgage book over the next two years.
A merger of the two banks would give Santander a 12.3 per cent stake in the UK’s mortgage market and is likely to result in job losses and branch closures.
The deal claimed its first victim yesterday when Alan Gillespie, the Ulster Bank chairman who was to become A&L’s new chairman in September, said he was no longer joining the company. His appointment was announced just last Wednesday, before Santander approached A&L with their offer.
Gillespie had not yet signed a contract with A&L so he will receive no form of compensation. Bennett said yesterday he planned to stay with the A&L until the takeover is completed.