Monday July 14, 04:13 PM
Santander Agrees A&L Takeover
By Sky News
Spanish bank Santander says it has reached a deal to take over UK lender Alliance & Leicester. The Spanish bank, which owns Abbey, says it will offer one share for every three of A&L and a cash dividend of 18 pence per A&L share.
Shares in A&L had been hammered by the credit crunch but jumped almost 50% after it said it was "at an advanced stage of discussions" over the potential 299p-a-share offer.
The total value of the offer is more than £1.3 billion.
A Santander takeover could cause competition concerns due to its ownership of Abbey.
The deal come as A&L struggles with the impact of the global financial turmoil, which has seen it relegated from the FTSE 100 Index this year.
Shares have fallen on fears that its lack of scale would cause it to face the same funding difficulties as Bradford & Bingley and Northern Rock.
Sky's business editor said: "How on earth the bidding bank could have any real idea of Alliance & Leicester strengths and weaknesses - in other words exactly what sort of business they were buying - in five days is beyond me."
Although A&L said in May that it was funded into the second quarter of 2009, being part of a larger group would give it a stronger financial platform in the more uncertain conditions.
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