Alliance & Leicester at centre of bid speculation

Alliance & Leicester was at the centre of bid speculation today after reportedly rejecting an informal approach from France’s biggest bank.

The Independent newspaper said the overtures from Credit Agricole in the past fortnight suggested it may be prepared to table a bid worth £5.8bn (€8.4bn).

In a further twist Alliance is also thought to have spoken to another interested buyer, Santander – the owner of rival mortgage bank Abbey.

The discussions with the Spanish bank are believed to focus on the possibility of a deal worth more than 1400p a share – £6.2bn (€8.9bn) – but Alliance chief executive Richard Pym values the UK bank at 1500p a share, or £6.7bn (€9.6bn).

Alliance is seen as one of the UK banking sector’s most likely bid targets, with its shares at a record high on the back of the speculation.

The stock gained another 3% to leave Alliance at 1226p today.

A takeover could provide a windfall for more than half a million customers who still hold the free shares they received at the time of the group’s demutualisation in 1997.