Bloomberg News

Lloyds Reopens Discussions on Branch Sales to Other Bidders

April 27, 2012

Lloyds Banking Group Plc (LLOY), Britain’s largest mortgage lender, will consider alternative bids for the 632 branches regulators are forcing it to sell, paving the way to reopen talks with NBNK Investments Plc. (NBNK)

Lloyds is no longer in an “exclusivity agreement” in relation to discussions with Co-Operative Group Ltd., the London-based lender said in a statement today. The bank will “consider detailed discussions” with other bidders, including NBNK, whose 1.5 billion-pound ($2.4 billion) offer to buy the branches Lloyds spurned last year.

Co-Op was in December named preferred bidder for the branches that Lloyds has to sell by the end of November 2013 to comply with European Union state-aid rules after its government bailout. Co-Op Chief Executive Officer Peter Marks said on March 29 there were “very material regulatory issues” to its proposed purchase of branches, fueling concerns its bid may collapse.

“The Co-Operative Group remains very involved in the process currently,” Co-Op said in a statement today. “We continue to make good progress.”

NBNK said in a separate e-mailed statement that its offer will “safeguard and create jobs and deliver superior value to Lloyds and its shareholders.”

Lloyds closed down 0.9 percent at 31.19 pence in London trading, the only decliner among Britain’s five biggest banks.

‘In Jeopardy’

“Today’s move appears perfectly sensible,” said Ian Gordon, an analyst at Investec Securities in London. “It’s no secret that the Co-Op deal may be in jeopardy, and it’s also entirely possible that an alternative transaction with NBNK may yet deliver a better outcome. I expect the uncertainty to persist for some time to come.”

Lloyds said last month it’s separately preparing for a possible initial public offering of the branches. NBNK submitted a fresh bid for the branches on April 12, offering investors cash or shares in the branches. The bid would allow Lloyds to avoid the risks of selling the unit in an IPO, NBNK said.

Lloyds will proceed with discussions only if “satisfied that any proposal is likely to achieve the appropriate regulatory clearances and offers greater value and/or certainty to Lloyds shareholders against its alternative option of an IPO,” according to its statement.

To contact the reporters on this story: Ambereen Choudhury in London at achoudhury@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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