Alliance and Leicester shares soar up 16% after rumours of a takeover bid resurface.
Yesterday, Alliance and Leicester shares jumped over 16% in value after rumours of a takeover bid by Spanish banking giant Santander. The two banks met in negotiations before Christmas and while they failed to agree on a price, rumours of a second approach by Banco Santander are rife.
If takeover proceedings do go ahead this could prove to be a great opportunity for A&L shareholders to claw back some equity after a poor year that has seen the value of their investments drop by over 40%.
Ever since rumours of the ‘credit crunch’ began Alliance and Leicester have been fending off speculation that they were about to succumb to the same difficulties as Northern Rock, requiring an ‘emergency loan’ to bail them out of financial over commitment. However, a statement released in November ’07 reassured their investers that their money was safe after the bank guaranteed its financial security with backing until at least the third quarter of 2008.
Santander took over UK bank Abbey in 2004 helping to secure its stake in the British finance market so much so that it is now the 3rd largest mortgage and savings provider in the UK with a vast high street presence.
Currently valued at just over £2,73bn, a takeover bid for Alliance and Leicester would only act to strengthen Santander’s hold on the UK mortgage market increasing its share from Abbey’s 6.7% to an impressive 11%. Investing in A&L would also help the banking giant broaden its investment in the small to medium business market which Abbey has found difficult to crack.
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