Analysts were encouraging Abbey National to look for at least £8.50 a share in any offer for the company as Mortgage Solutions went to press.
James Eden, analyst at Commerzbank, said: ‘Abbey National should engage with both the Bank of Ireland and the National Australia Bank and get the best deal possible for shareholders.’ He said the bank should: ‘Play the predators off against each other,’ to maximise interest in the company.
Bank of Ireland put proposals on the table last week, which Abbey was unable to accept after an initial assessment.
A source close to the matter told Mortgage Solutions Abbey felt the deal incorporated an insufficient premium for the group. The source said much of the funding for the cash element would also come from Abbey’s own balance sheet once the two operations had been combined, and so weaken its capital reserves.
Other concerns come from the £400m figure mentioned as possible savings from a merger. With a group-wide cost review underway, it is believed Abbey feels it can make a large degree of these savings on its own.
Bank of Ireland head of group communications, David Holden, said it was too early to discuss any further amendments and offers that may be proposed. However, he hoped the initial proposal would act as a starting point to further discussions with Abbey over a possible takeover.
Whether National Australia Bank comes back into the fray remains to be seen. In a statement after its initial proposal had been rejected, it said: ‘The discussions regarding the National’s proposal did not result in any agreement and have now ceased.’
Abbey has stressed that business will continue as usual while any negotiations are taking place and has signed a distribution deal with Prudential for its with-profit bonds. A preliminary agreement has also been reached for Abbey to distribute Prudential’s life protection products.