HBOS shareholders will receive 0.83 Lloyds shares for each one share that they have which values the deal at £12.2 billion based on Lloyds TSB closing price yesterday. This will mean Lloyds TSB Shareholders owning approximately 56 per cent of the issued share capital of Lloyds TSB as enlarged by the acquisition and existing HBOS Shareholders approximately 44 per cent.
Lloyds TSB's who will have approaching a third of the UK mortgage market said that the "intention is that the combination will strengthen its ability to serve UK customers in these difficult markets. Specifically Lloyds TSB intends that new lending by the new combined bank for both UK mortgages and SMEs will continue at least at current levels and will expand as market conditions improve. In addition, Lloyds TSB intends to increase the range of products on offer on competitive terms to First Time Buyers, building on the current shared equity and shared ownership offers.
Following the announcement the Secretary of State for Business and Enterprise John Hutton announced his intention to issue an intervention notice in the proposed merger of HBOS and Lloyds TSB on public interest grounds to ensure the stability of the UK financial system. This means that a deal that would have previously been unthinkable can go ahead.
The combined group will have brands including Bank of Scotland, Halifax, C&G, Birmingham Midshires and Scottish Widows.
Commenting on the Acquisition, Sir Victor Blank, Chairman of Lloyds TSB said: "This will be a unique opportunity to accelerate and extend our strategy and create the UK's leading financial services group. Lloyds TSB/HBOS's outstanding franchise will enable it to service more of its customers needs with the balance sheet strength to prosper in challenging markets. This is a good deal for customers and shareholders."
