Lloyds HBOS takeover: 0.6 instead of 0.83?

stebiz

superstar wrote: »

I thought this deal was done and dusted, is it not?

The sale will go through. But HBOS are in no real position to bargain at the moment. Eg. You are going to lose your house next week and will not get anything. Joe bloggs comes along and offers you 90% of the valuation which you gladly accept. A day before the deal goes through he comes back and offers you 80% but you are in no position to negotiate because if you give it back to the bank you will lose everything anyway.
Stebiz

Lokolo

stebiz wrote: »

The sale will go through. But HBOS are in no real position to bargain at the moment. Eg. You are going to lose your house next week and will not get anything. Joe bloggs comes along and offers you 90% of the valuation which you gladly accept. A day before the deal goes through he comes back and offers you 80% but you are in no position to negotiate because if you give it back to the bank you will lose everything anyway.
Stebiz

And as Brian would say on Family Guy - 'You Cheeky B******'

stebiz

Lokolo wrote: »

And as Brian would say on Family Guy - 'You Cheeky B******'

:rotfl:

Stebiz

stebiz

Fella wrote: »

No. With respect, both of you have the wrong idea about what has been agreed. The current deal is based on 0.83 of a Lloy share per 1 HBOS share. The actual price paid for HBOS DOES change, it's entirely dependent upon the price of Lloy shares.

The key thing here is the differential between the two. If the deal was a certainty then the HBOS shareprice should be exactly 83% of the Lloy share price (whatever the Lloy shareprice is). Therefore with Lloyds shares currently £2.50 HBOS should be £2.075. But in fact they are £1.48

This is because when the market closed today, the market was pricing in that this deal would be renegotiated.

(Which doesn't mean it WILL be negotiated - things are changing on an hourly basis right now so who knows what will happen - but that's what the market is saying).

If you disagree, buy HBOS! If the deal was a certainty then buying HBOS shares right now is effectively the exact same thing as buying Lloy at a huge discount to their current shareprice.

25% increase today in HBOS. Paper profit of £1,500 in 18 hours. Just that though. Paper. I'm into these banking shares for the long term so I won't be selling. Not to be greedy but I think Lloyds has a good business model and hopefully the deal will go through. Anybody else agree with me?

Stebiz

Reaper

stebiz wrote: »

25% increase today in HBOS. Paper profit of £1,500 in 18 hours. Just that though. Paper. I'm into these banking shares for the long term so I won't be selling. Not to be greedy but I think Lloyds has a good business model and hopefully the deal will go through. Anybody else agree with me?

So much so that I had my money lined up ready to buy HBOS today, but now I think I'll wait and see as I've missed out on the best gains.

If I had bought today then I would have hung onto the shares as they convert to LloydsTSB because I believe the combined group would control so much of the market they would be in a good position for the future.

stebiz

Reaper wrote: »

So much so that I had my money lined up ready to buy HBOS today, but now I think I'll wait and see as I've missed out on the best gains.

If I had bought today then I would have hung onto the shares as they convert to LloydsTSB because I believe the combined group would control so much of the market they would be in a good position for the future.

That really is tough luck. The way this 'casino' is going things may change again so quickly. Who knows?

Stebiz

cbobting

just aired on the bbc. takeover is favoured on current terms and time.

stebiz

cbobting wrote: »

just aired on the bbc. takeover is favoured on current terms and time.

Yes looking good.

Major HBOS, Lloyds investor backs deal terms-source


LONDON (Reuters) - Standard Life Investments, a top investor in Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) and HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz), supports the planned takeover of HBOS by Lloyds under the terms originally announced, a person close to the investment firm said.
The news pushed HBOS shares higher, narrowing the discount they trade at relative to Lloyds' offer, in a sign that investors believe SLI's support makes the deal more likely to succeed.
Source: Reuters


http://www.reuters.com/article/bankingFinancial/idUSL172321720081002

agent_orange_2

Lloys have been a relatively prudent bank. I find it hard to believe they will take HBOS on without government guarantees. HBOS are rumoured to have some 6 billion Alt A loans (also known as 'liar loans') on their books. Why would Lloys want to take that on?

opinions4u

agent_orange wrote: »

Lloys have been a relatively prudent bank. I find it hard to believe they will take HBOS on without government guarantees. HBOS are rumoured to have some 6 billion Alt A loans (also known as 'liar loans') on their books. Why would Lloys want to take that on?

Alt A loans are 30% deposit sub-prime loans.

Not great business in these times, but you would have to see every single loan default on a worthless property for them to lose £6bn (roughly equal to 2007 profits).

The likelihood is that the £1bn asset write down may need to be increased slightly, but not to an amount that should worry Lloyds who have got an absolute bargain in HBOS (who are generally prudent lenders).