A&L held takeover talks with Spanish bank Grupo Santander late last year, according to press reports in the last couple of days. Apparently the negotiations for A&L – which would have been valued at more than £2.7bn – reached an advanced stage but eventually foundered on price. The reports suggest that discussions have been shelved for the time being, but Santander has not ruled out coming back with a better offer.
The news (which confirms widespread rumours last year) comes after a rotten 12 months for A&L. The lender’s share price fell by 43% last year as it was dogged by speculation that its finances were in almost as bad a state as Northern Rock (the only bank to suffer a bigger share price drop). It did rally in November, after picking up a £4bn cash injection from Credit Suisse, but after a year like that it’s bound to be vulnerable to a deep-pocketed rival.
The approach looks like an opportunistic move from Santander, which said a while ago that it wasn’t planning to make any more acquisitions in the UK. The Spanish group has been concentrating on organic growth since it bought Abbey in 2004, but clearly the prospect of snapping up A&L’s branch network on the cheap seemed too good to pass up.
No doubt other potential predators (possibly Credit Agricole, which was also sniffing around in 2006 before deciding against a bid) will be thinking the same thing – which means that A&L’s chances of surviving as an independent look slimmer than a B-list celeb in a New Year’s workout DVD. The stock market certainly seems to think so, judging by the 13% jump in the lender’s share price this morning.
And if A&L is on the block, it’s likely that other UK lenders of a similar size – like Bradford & Bingley, for example – will be too. As we all know, the UK is one of the few countries where every company seems to be up for sale to the highest bidder – so by the end of the year, there could be a few of us paying our mortgages overseas...