Magazine article American Banker

Lloyds Bids $6.5 Billion for Midland, Topping Hongkong's Friendly Offer

Magazine article American Banker

Lloyds Bids $6.5 Billion for Midland, Topping Hongkong's Friendly Offer

Article excerpt

Lloyds Bank launched a hostile $6.5 billion bid for British rival Midland Bank on Tuesday in the largest bank merger offer ever made outside Japan.

Midland, already assessing a $5.9 billion offer from the parent of Hongkong and Shanghai Banking Corp., is expected to resist the bid. On the London Stock Exchange Tuesday, Midland's shares were the most active issue, gaining 3.3%, while Lloyds' shares fell 2.3%, also in heavy trading.

Lloyds, Britain's fourth largest bank, placed two conditions on the bid for Midland, the third biggest U.K. bank: It wants access to all information available to Hongkong and Shanghai and the same regulatory treatment.

Midland's share price rose above the price being offered by Hongkong and Shanghai but fell well short of Lloyd's bid. That apparently reflected uncertainties involved in an unsolicited bid, a takeover strategy even more unusual among banks in Europe than in the United States.

If completed, the merger would probably propel Lloyds into the ranks of the top 20 banks in the world, with assets exceeding $220 billion. It would be larger than any U.S. bank but would probably climb no higher than third place in Britain, behind both Barclays Bank and National Westminster Bank.

Parallels with U.S. Mergers

John D. Leonard, bank analyst at Salomon Brothers Inc., said Tuesday there are a number of parallels between in-market banking mergers in the United States and in Britain.

"Britain is generally overbanked and overbranched, although not exactly in the manner we mean when we speak of industry overcapacity here," he said. …

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