Bank set to take over First Active by 2004

ROYAL Bank of Scotland expects its bid for First Active, announced Monday, to be completed by January 2004 if there are no hitches along the way.

Under stock exchange rules it is obliged to post the offer document within 28 days of the bid.

Once that has been done, First Active is obliged to call an extraordinary general meeting within 21 days of the offer document being delivered.

The Irish Financial Services Regulatory Authority (IFSRA) has already cleared the bid by RBOS and the process to be followed now is expected to be straight forward.

Outsiders have ruled out another bid, while analyst Stuart Draper of Dolmen Butler Briscoe says shareholders who stand to make €6,000 each from the €6.20 per share bid have done better than expected.

Before the 6.20 bid the shares stood at €4.65 and compares with a launch price of €2.86 in September 1998 when the company was floated.

The value of the bid gives share owners a 156% premium on the initial flotation price.

Mr Draper has tipped the Bank of Ireland as the next takeover play in the Irish market. The bank is rated at nines times earnings when some years back it was up to 15 times. That compares with the figure of 16 times paid by RBOS for First Active.

Bearing that in mind, the Bank of Ireland has lost its key defensive mechanism in a high share price which would have made it expensive to buy.

But primarily Mr Draper believes the failed bid for Abbey National in Britain last year has exposed the country’s second biggest bank to a hostile bid.

Meanwhile a spokesman for First Active confirmed that once shareholders have voted for the RBOS bid it will have to go to the High Court for ratification.

But that is just a technical issue due to the way the bid was structured and the process does not imply a further hurdle that has to be got over prior to the deal going through.