The proposed takeover of HBOS appears to be a �done deal� after Lloyds TSB shareholders overwhelmingly backed the bank�s rescue of its ailing rival.
The proposed takeover of HBOS appears to be a "done deal" after Lloyds TSB shareholders overwhelmingly backed the bank's rescue of its ailing rival.
A resounding 96% vote in favour of the deal at a meeting of shareholders in Glasgow yesterday virtually guarantees the same outcome when HBOS shareholders meet next month when only 75% of the vote will be needed to secure the rescue merger.
With no alternative on the table and many Lloyds TSB shareholders also with a stake in HBOS, any doubt that the takeover will go ahead evaporated after the first of the two key votes.
Speaking after yesterday's vote, Lloyds TSB chairman Sir Victor Blank said it was an important milestone. "This is overwhelming endorsement for the logic of this transaction," he added. An HBOS spokesman said: "We welcome today's overwhelming vote by Lloyds TSB shareholders in favour of the acquisition. The vote represents another very important milestone for the deal."
Commentators were equally clear where the course of the deal now lay."It looks like a done deal," 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."
Competition rules have been waived to allow the merger, which is expected to be completed by January. If it gets the go-ahead, it will create a banking giant with around 145,000 staff and 3000 branches across the UK.
The majority of the 372 shareholders at yesterday's meeting cast their votes electronically, while the remainder cast a paper vote. These were added to the thousands of those who cast their vote by proxy.
Concerns over thousands of possible job cuts if the takeover goes ahead led to a protest by unions outside the Scottish Exhibition and Conference Centre in Glasgow and some shareholders voicing their opposition.
Facing angry questions from the floor at the SECC meeting, Sir Victor defended the company's performance and said the merger represented a unique opportunity generated by the banking turmoil in the to create the UK's "leading financial services company".
With unions petitioning the meeting outside, Sir Victor gave assurances that any job losses resulting through £1.5bn "synergy" savings from the deal would be made "humanely" and in consultation with staff and union representatives but he refused to say how many posts are expected to go or give a guarantee that compulsory redundancies would be avoided.
The meeting also approved plans to raise £5.5bn through the issuing of new shares and special preference shares. Lloyds will not be able to pay dividends as long as any of the £1bn in preference shares held by the government is outstanding.
Sir Victor said the company would seek to resume dividend repayments next year but that this would be dependent on the condition of the financial markets.
Shareholder Tony Richardson expressed his dismay that the government had gone above competition rules for the proposed merger to be considered and told the meeting: "Most of us think this deal stinks."
Sir Victor said: "For very complex reasons originating in the United States, we have had a banking system which has essentially nearly collapsed. The government has had to step in, to secure the position of banks."
Under the proposed deal, HBOS investors will receive 0.605 of a Lloyds share for every one of their own shares, in a deal valuing HBOS at £4.3bn, based on last night's closing prices.
HBOS shareholders were last week warned by their chairman, Dennis Stevenson, of the risk of nationalisation if the takeover falls through.
