Unnamed fund managers have lined up to tell U.K. newspapers that they don't think much of an alternative proposal to Lloyds TSB Group plc's government-brokered takeover of Edinburgh, Scotland, lender HBOS plc, a deal worth £5.8 billion ($9.1 billion) based on Lloyds' current share price.
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The plan, mooted over the weekend by two pillars of the Scottish banking community, had always appeared sketchy at best. Peter Burt, who led Bank of Scotland plc prior to its merger with Halifax plc to create HBOS, and George Mathewson, former chairman and CEO of Royal Bank of Scotland Group plc, wanted HBOS to scrap the takeover and instead install themselves as chairman and CEO, respectively, while they worked out what to do. HBOS said the proposal was too vague to warrant further discussion, while analysts questioned the two knights' assumption that a standalone HBOS would need no more than the £11.5 billion it has already agreed to raise from the government. Even labor union Unite called the proposal "irresponsible."
Mindful that the takeover of any major Scottish company by a London peer is a political hot potato, Alistair Darling, U.K. finance minister, and Prime Minister Gordon Brown have always insisted they are open to alternative proposals for HBOS. But Tuesday's press reports must have been a welcome accompaniment to their morning coffee. - Laura Board
