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Lloyds revises HBOS terms; pair to raise £17bn

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Date: Monday 13 Oct 2008

LONDON (ShareCast) - Turbulent markets have convinced Lloyds TSB to revise down the terms of its offer for rival HBOS and raise £5.5bn of new capital.

The bank, which had offered 0.833 of its shares for each HBOS share, is now only prepared to offer 0.605 of its shares for each share in the Halifax-owner. HBOS is recommending the lower offer, which has been sanctioned by the Takeover Panel.

That values HBOS at around 114p a share, or just over £6bn, less than the 124p closing price on Friday. The deal was originally valued at over £12bn.

At the same time, an offer will also be made to HM Treasury to exchange their preference shares in HBOS for equivalent preference shares in Lloyds TSB.

Lloyds said it wants to raise a total of £17bn of capital, of which £11.5bn, made up of £8.5bn in ordinary shares and £3bn in preference shares, will be raised by HBOS and £5.5bn, including £4.5bn in ordinary shares and £1bn in preference shares, by Lloyds.


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