Building society ripe for takeover

ABBEY NATIONAL is no stranger to takeover bids and it is presently ripe for the picking.

Abbey National plc shares were languishing badly at lows last seen way back in 1995 before Bank of Ireland’s governor Laurence Crowley went calling three weeks ago on Lord Burns, the present executive chairman at Abbey.

The Bank of Ireland approach is the best news Abbey shareholders received all year.

Yesterday, from the opening of business the shares raced ahead 7% to £5,4792, but well off the 12-month high of £11.48

Last year Abbey National escaped a hostile bid from British rival Lloyds TSB after the British government blocked the deal on competition grounds.

That decision resulted in the majority of stockbroking analysts predicting any takeover of Abbey National would have to come from an overseas player.

Abbey, whose roots date back to 1849 was linked earlier in the year to a possible bid from National Australia Bank.

A successful takeover of Abbey National by Bank of Ireland would have the effect of making the Irish bank a much more difficult catch for an even larger predator.

Bank of Ireland had been linked to a possible merger with AIB bank, but yesterday the would-be suitor was wished well by AIB chief executive, Michael Buckley.

“I wish them the very best of luck, but I don’t think it changes the competitive landscape for us,” he said at a Merrill Lynch conference on banking and insurance.

Analysts also said that a bidding battle for Abbey was unlikely in the current bear market environment, which has seen banks around the world battle with their own internal problems of rising bad debt charges and falling profits.

Abbey National shares have underperformed the DJ Stoxx European banking sector by about 25% since the start of 2002, based on Friday’s closing share price.

Bank of Ireland has outperformed the same sector by about 40% during that period.