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Sunday, November 8, 
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Santander in $2.5B deal for Alliance & Leicester

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The U.K.'s Alliance & Leicester plc Monday agreed to a £1.26 billion ($2.50 billion) takeover by Spain's Banco Santander SA, in the culmination of months of bid speculation surrounding the mortgage lender.

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Just hours after announcing advanced talks with a mystery suitor, the Leicester, England-based group said Santander had agreed to pay 299 pence in stock per share, more than 36% above the bank's Friday closing price of 219.25 pence. The Spanish group will also pay a soon-to-be-declared first-half dividend of 18 pence per share, putting a 317 pence per share price on both components of the offer.

Speculation that Alliance & Leicester could attract an offer intensified in February when it announced a 29% decline in 2007 core profit. Santander, which owns Alliance & Leicester's larger rival Abbey National plc, had long been considered a potential bidder, as had France's Crédit Agricole SA and London-based Lloyds TSB Group plc.

The bank's brightening prospects are a marked contrast to those of certain rivals also hit by the sudden collapse of the country's buy-to-let mortgage market and a sharp downturn in regular mortgage lending.

Alliance & Leicester in May said it was able to secure short- and midterm financing in the first four months of the year, steps that have proved difficult for many peers. The group, however, said it wrote down £53 million in investment valuations and booked a £139 million loss on other treasury assets. - Andrew Bulkeley and Laura Board

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