Shareholders in Lloyds TSB yesterday overwhelmingly gave their backing to the proposed merger with Edinburgh-based HBOS but not before a number of dissident investors expressed opposition to the deal.
Shareholders in Lloyds TSB yesterday overwhelmingly gave their backing to the proposed merger with Edinburgh-based HBOS but not before a number of dissident investors expressed opposition to the deal.
Lloyds' shareholders, meeting at the SECC in Glasgow, voted 95.98% in favour of the takeover and also approved the plans to raise £5.5bn by issuing new shares and special preference shares.
Commenting on the positive outcome, Sir Victor Blank, chairman of Lloyds TSB said: "Today's successful vote marks another important milestone in the proposed acquisition of HBOS plc to create the UK's leading financial services company.
"I am delighted that our shareholders have endorsed the compelling strategic logic for this transaction."
Eric Daniels, group chief executive of Lloyds TSB, further commented: "We are very pleased to have received our shareholders' endorsement for the strategy we have set out.
"We believe this trans-action provides certainty for the shareholders of HBOS and they, along with the Lloyds TSB shareholders, will have the opportunity to share in the benefits that come from the combination.
"We remain on track to complete the proposed acquisition of HBOS in mid-January 2009."
"It looks like a done deal now," said Leigh Goodwin, an analyst at brokers Fox-Pitt Kelton in London. "A lot of Lloyds shareholders are also HBOS shareholders, and this increases the likelihood that HBOS shareholders will vote in favour."
HBOS shareholders will vote on the deal to create a huge banking group with 145,000 staff and 3000 branches next month.
HBOS was formed in September 2001 by a merger of Bank of Scotland and the Halifax group. Blank assured shareholders the Bank of Scotland brand name would still be used north of the border after completion of the deal although he did not say for how long this would be the case.
The government has allowed the takeover of HBOS by Lloyds to bypass normal competition rules. When the deal was originally announced in September, the government backed the acquisition using a special national interest clause on the grounds that a collapse of HBOS would have had a disastrous impact on the UK economy.
Sir Peter Burt, formerly of the Bank of Scotland, and Sir George Mathewson, ex-head of the Royal Bank of Scotland have said HBOS could remain independent if it were to take the government's bail-out money without merging with Lloyds TSB.
But Chancellor Alistair Darling said on Tuesday that attempts by any of the banks to renegotiate the £37bn bail-out of the banking sector could prove costly for shareholders. HBOS chairman Dennis Stevenson warned last week that the banking group may have to be nationalised if the takeover fell through.
He said that access to the government re-capitalisation arrangement was not "automatic" and that any bank seeking a new package risked getting a far lower share price than when the offer was first made.
Blank and Daniels told shareholders they backed the government initiative, adding that going to the private market for financing would be too expensive and not in the best interests of shareholders.
Blank and Daniels appeared to be on the defensive for much of the meeting as shareholders peppered them with negative comments and questions. One investor questioned why Lloyds wanted to take over "a very large failed bank", while another referred to HBOS as "a terminally diseased company".
One of the dissidents said the takeover deal was "cooked up at a cocktail party" with Prime Minister Gordon Brown - an accusation denied by Blank - and drew some applause when he asserted "most of us think the deal stinks".
Blank and Daniels tried to soothe shareholders' concerns, saying an extensive analysis of the deal was conducted with "5000 man-hours" spent on due diligence and other measures.
An investor from Mother- well seemed to have the board baffled when he asked why there were no top HBOS executives available to answer questions. At this point in the deliberations, Blank appeared to be exasperated.
"This is a Lloyds TSB meeting," he said curtly.
"I just don't understand it," the man from Motherwell said repeatedly, clearly dissatisfied with the chairman's response.
Before the meeting started, members of the Unite union demonstrated outside the SECC against the job losses that are likely to result from the deal.
Blank told shareholders and some union officials who were present at the meeting that the company had already started talks on staffing issues.
