THE bidding battle for Abbey seems to be over before it even started. HBOS, which had expressed an interest in trumping the bid from Banco Santander Central Hispano, withdrew from the contest this week.
The Spanish bank is the only game in town, and many Abbey investors will spend this weekend weighing up what Santander has to offer. They will have plenty to read because many will now have received the offer documents, posted yesterday. Here we answer their questions.
What is the offer worth?
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Santander’s share price was €8.07 at the time of going to press. Abbey shareholders will receive one Santander share for each Abbey share they own, plus a special dividend of 31p, giving a total value of £5.80 per share. The final offer price will be set at 4.30pm on November 12, when the deal is scheduled to go through.
What does the offer document contain?
A lot of legal information about the deal, as well as Abbey and Santander’s full annual reports, interim reports and accounts.
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What do I have to do?
Make up your mind about how you will vote. Santander needs the backing of investors holding more than 75 per cent of Abbey and, if it gets that, you will be forced to sell even if you decide against doing so.
There will be an extraordinary general meeting for shareholders to vote on the proposals at Wembley Conference Centre on October 14. You can either attend or vote by proxy — forms will be sent with the offer documents.
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How does the offer measure up?
Abbey investors may be miffed to be getting just £5.80 for their shares. Lloyds TSB, remember, offered £13.62 per share for Abbey in 2001, a bid that was blocked by the Competition Commission. And, after all the rumours about HBOS’s interest, they may be disappointed not to see a “white knight” emerging.
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What if shareholders
vote “no”?
Santander could walk away from the deal — or perhaps come back with a better offer. If no deal is concluded, Abbey will remain a UK plc.
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Will it be awkward owning shares in a foreign bank?
Potentially. It is difficult to keep track of what is happening in a foreign company. If anything went wrong, would you know anything about it until the share price had already plummeted, for instance? Santander is helping out by planning a London listing, to be arranged before next summer. Dividends will be paid in sterling and there will also be a free share-dealing facility in Abbey branches for those with 2,000 shares or less who wish to sell all of their holdings.
Anything else to consider?
There are tax implications of receiving dividends from a foreign firm because Spanish authorities will charge a 15 per cent withholding tax. There is a double taxation treaty, which means the higher of the taxes payable in either country is paid, not both. Basic- rate taxpayers, who do not pay tax on UK dividends, might have to pay the 15 per cent Spanish withholding tax. Santander and Abbey are speaking to tax authorities about the matter.
Abbey Shareholder Services:
0870 5329430.