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Tuesday, 12 December, 2000, 18:30 GMT
Abbey rebuffs new Lloyds TSB bid
Lloyds TSB, Abbey National and Bank of Scotland
Lloyds TSB has now offered 18.2bn for Abbey National
The UK mortgage bank Abbey National has rejected a second takeover approach from Lloyds TSB.

In a statement to the stock exchange, Abbey said the 18.2bn ($26.3bn) offer for it was "inadequate and uncertain".

Lloyds had offered 1.5 of its shares plus 260 pence in cash for each Abbey share. This valued Abbey shares at 12.74 apiece, or an 11% premium to Monday's closing price.

Lloyds first approach reportedly involved a valuation of Abbey at about 12.6bn.

The unanimous board rejection was made with regard to shareholder value, deliverability and regulatory risk, Abbey said.

The bank's top officials are now thought to be drawing up a strategy to protect their long-running efforts to merge with Bank of Scotland.

Lloyds will now be faced with the decision as to whether to increase its offer again for Abbey or attempt a hostile takeover.

Cash sweetener

Financial advisers to Abbey and BoS are researching how they could offer shareholders a cash sweetener, it was earlier reported.

Any handout would bolster support for the BoS deal, and, should Lloyds escalate its merger campaign into a full-blown takeover battle, reduce the attractions to shareholders of the rival deal.

Lloyds, if it succeeds, will axe 8,000 jobs through cutting out areas of duplication with Abbey National. Earlier reports said 30,000 jobs were under threat.

But Lloyds is prepared to pledge that it will not close any Abbey branches for two years.

Regulators attentions

An Abbey/BoS merger is likely to cost fewer jobs, as there are fewer areas of overlap between the two banks' operations.

This deal, which would create a sizeable rival to the UK's four big High Street banks, is also less likely to attract the attentions of regulators.

A merged Abbey and Lloyds bank would have 22% of the UK mortgage market and a 27% share of Britons' current accounts.

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See also:

08 Dec 00 | Business
Lloyds ponders fresh Abbey move
07 Dec 00 | Business
Abbey rejects Lloyds bid
03 Dec 00 | Business
Abbey 'preparing 25bn merger'
05 Nov 00 | Scotland
Abbey seeks talks with BoS
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