Bank of Ireland risks shares plunge with bid details
Shares in Bank of Ireland continued to fall yesterday after a rally on Friday.
The shares are now down 5% since news of BoI's plans to takeover Abbey National became public, wiping 625 million off the value off the Irish bank.
Goodbody financial analyst Len Riddell told clients of the AIB Bank-owned stockbroking house that a second, sweetened bid from Bank of Ireland (BoI) is likely to be rejected by Abbey National this week: "BoI is expected to disclose further details concerning its proposal early this week.
"It appears that BoI's improved offer could value Abbey shares at stg£7.50, a 21% premium to last Friday's closing, and the cash element of any bid could amount to around stg£1.5bn to stg£1.6bn," he said.
Mr Riddle said the market appears as determined as the Abbey National board to ensure that BoI's bid for Abbey fails: "While the market should welcome increased disclosure relating to BoI's proposals, we still believe the risk for the stock price on the announcement is on the downside. Given the minimal likelihood of a successful bid at this stage we would buy into any weakness shown by the stock."
Yesterday Bank of Scotland (Ireland) (BoS) showed its determination to compete with the main players in the Irish Banking industry with the acquisition of ICC-Heller.
BoS chief executive Mark Duffy said: "We have a driving ambition to become Ireland's No 1 Business Bank by 2005 and I believe this acquisition is another step towards achieving this objective." Meanwhile, Credit Suisse Group, Deutsche Bank AG, and P. Morgan Chase & Co investment banks are accused in a lawsuit of defrauding a unit of Abbey National which bought about $100 million in notes linked to the performance of Enron Corp.
The seven investment banks, together with former Enron auditor Arthur Andersen LLP "intentionally or recklessly" misrepresented Enron's precarious financial condition in order to secure Enron's banking, auditing or consulting businesses, Abbey National Treasury Services plc said in a suit filed with the US District Court in the Southern District of New York
