Abbey board agrees to £8.5bn takeover deal

The board of the Abbey National has agreed to a takeover deal from Spanish giant Banco Santander worth around £8.5 billion.

Following to advice from Morgan Stanley, the Abbey Board said that it intended to "unanimously" recommend that its shareholders vote in favour of the scheme.

The directors of Abbey have confirmed to Banco Santander that they intend to vote in favour of the scheme.

The combination of Banco Santander with Abbey will create "a unique multi-local retail bank" and the tenth largest bank in the world, the companies said. Headquartered in Madrid, Banco Santander Group was the second largest banking group in the Euro zone as at 31 December 2003. The Abbey is currently Britain's second largest mortgage lender.

In a statement, Banco Santander said it believed that Abbey was an "attractive platform through which to enter the profitable UK banking market, with significant potential".

Under the terms of the acquisition, Abbey shareholders will receive one share in Banco Santander for every share they own – and shareholders can also expect 31p per Abbey share.

The acquisition is conditional on, amongst other things, certain approvals by Banco Santander shareholders and Abbey shareholders, and the sanction of the scheme by the Court.

The acquisition will be governed by English law and will be subject to the applicable rules and regulations of the UK Listing Authority, the London Stock Exchange and the City Code. In addition, the acquisition will be subject to the applicable requirements of Spanish law and regulation.

Emilio Botin, Chairman of Banco Santander, said: “Abbey’s leading position in the UK mortgage market, combined with its strong distribution network, represents for Banco Santander and Abbey shareholders a value-creating opportunity based on the application of Banco Santander’s commercial and technological best practices to Abbey’s banking operations. Abbey’s business will contribute to reinforce our pan-European franchise and provides the Group with a more balanced stream of earnings.”

Luqman Arnold, Chief Executive of Abbey, said: “Banco Santander's outstanding retail financial services skills - both marketing and operational - will provide key resources and know-how to accelerate implementation of Abbey's personal financial services strategy whilst simultaneously reducing execution risk. Our shared commitment to consumers will bring undoubted benefits to our customers and shareholders. Banco Santander's proven ability to operate successfully in a diverse range of countries and cultures bodes well for the success of the combination.”

(gmcg)