01/10/2008 - 10:54

Fears grow over HBOS rescue plan

01/10/2008 - 10:54

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The rescue of BankWest parent, HBOS plc, could be in jeopardy after the value of its shares plunged yesterday, prompting fears that white knight Lloyds TSB could be paying too much for the takeover.

The rescue of BankWest parent, HBOS plc, could be in jeopardy after the value of its shares plunged yesterday, prompting fears that white knight Lloyds TSB could be paying too much for the takeover.

According to a report on London's Guardian website, HBOS shares fell 13 per cent, valuing the company at £6.4 billion.

Last month, Lloyds unveiled an all scrip takeover package for HBOS, with shareholders to receive 0.83 Lloyds shares for every HBOS share.

Following yesterday's share price plunge, the Lloyds deal is now valued at £9.8 billion, the Guardian reported.

The price differential has heightened fears that the deal may not go ahead on the original terms, which were backed by Prime Minister Gordon Brown after competition laws were changed.

Last night, Mr Brown insisted the transaction will go ahead.

The Financial Times reported Lloyds as saying that it is pressing ahead with the deal with one person working on the takeover saying the bank will do whatever it takes to get the deal over the line.

 

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