LONDON (Reuters) - British bank Lloyds TSB (LLOY.L) has announced plans to buy its troubled domestic peer HBOS Plc HBOS.L to create a UK market leader in retail banking.
Here are some facts about the deal:
— The all-share merger values HBOS at 12.2 billion pounds. Lloyds is offering 0.83 of its shares for each HBOS share, valuing them at 232 pence, based on the closing price of Lloyds shares on Wednesday. HBOS shares have tumbled from 734 pence at the end of 2007, losing over three-quarters of their value so far this year.
— Existing Lloyds TSB shareholders will own 56 percent of the newly formed group whilst HBOS shareholders will have a 44 percent stake.
— The deal is expected to boost annual earnings by over 1 billion pounds a year by 2011, over 10 percent of the combined cost base. It will also boost earnings per share by over 20 percent a year from 2011.
— Cost savings are to be driven by branch closures and back office and network integration. The group will combine its general insurance platforms.
— Lloyds TSB has 1,900 branches compared to 1,100 branches of the Halifax and the Bank of Scotland.
— HBOS is the largest mortgage provider in the United Kingdom with a 20 percent market share. Lloyds has a 8.4 percent market share.
— Lloyds TSB is the largest current account provider with a 22 percent market share and 13 million customers. HBOS has a 13 percent market share of the current-account market.
—HBOS is the largest provider of saving accounts in the United Kingdom with a 16 percent market share. Lloyds is the number three player in terms of savings.
- The enlarged group’s final dividend will be paid out in shares.
— Just over half (55 percent) of the new combined group will be funded by customer deposits. It has 80 billion pounds of liquid reserves.
— The company will use the Bank of Scotland’s headquarters, the Mound, as its Scottish headquarters.
— The acquisition is expected to complete at the end of 2008 or early 2009.
— The new group will be led by Lloyds Chairman Sir Victor Blank and Chief Executive Eric Daniels.
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Compiled by Lorraine Turner; edited by Simon Jessop