Lloyds lowers HBOS takeover offer

Lloyds TSB has renegotiated the terms of its takeover of fellow bank HBOS, reducing the amount of Lloyds TSB stock it will give HBOS shareholders.

HBOS shareholders will now get 0.605 Lloyds shares for every HBOS share, against the original offer of 0.833.

It follows the news that the two banks will get a combined £17bn of taxpayers' cash to bolster their finances.

HBOS said the injection of capital meant the government could end up with 43.5% of the combined group.

Banking giant

Under the government's plan to stabilise the banking system, HBOS is set to get £11.5bn of government cash and Lloyds £5.5bn when the merger is successfully completed.

When the deal is concluded, HBOS's chairman Lord Dennis Stevenson and chief executive Andy Hornby will both stand down.

First announced on 17 September, Lloyds TSB's takeover of HBOS will create a banking giant holding close to one-third of the UK's savings and mortgage market.

HBOS, which was formed by the merger of the Halifax and Bank of Scotland, is the UK's largest mortgage lender with a 20% market share.

The government said its investments in Lloyds TSB/HBOS and RBS are not permanent, and that it intends to sell its shares when the market recovers.

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