A&L warns shareholders to support Santander takeover

by Gill Montia

Story link: A&L warns shareholders to support Santander takeover

Details of Alliance & Leicester’s (A&L) proposed sale to Spanish banking group, Santander, are being circulated to shareholders.

The recommendation of acceptance of the offer by A&L’s board comes with a warning that the bank could fall prey to significant external risks if the deal is rejected.

The bank’s profit for the six months to the end of June was practically wiped out by the credit crisis: A&L posted pre-tax profit of £2 million compared with £290 million in the first half of 2007.

The £1.3 billion proposal will give A&L shareholders one Santander share for every three A&L shares held.

The offer values A&L at £1.333 billion and represents a 53% premium on the value of the bank’s stock in July.

A&L’s board needs the support of 75% shareholders by 14th September and hopes to complete the transaction in October.

If the takeover is successful, A&L will be merged with Santander’s UK subsidiary, Abbey.

The merged entity would have 959 branches and hold 10% of the UK’s current account market; such a move could save Abbey around £180 million a year in costs.

A&L employs around 7,500 staff and under the terms of the acquisition, each will receive shares in Santander, valued at over £900.

However, job losses are anticipated.