Alliance & Leicester shares soar after takeover talks resume

Spanish bank Santander, who took over Abbey National in November 2004, was believed to be in negotiations to buy mortgage bank Alliance & Leicester (A&L) but talks faltered after both parties failed to agree a price, according to sources close to the group.

However, there are reports that takeover talks have resumed and shares in A&L rose 57p to 705p yesterday following the news. There has been speculation about the possibility of a takeover for over a year.

Shares in A&L fell 43% last year following the Northern Rock crisis. Many believed the former building society would follow in the footsteps of the crisis-torn bank as out of all the mortgage banks, A&L was seen by analysts as the most similar to Northern Rock.

Back in November, A&L tried to reassure investors when it said write-offs would be only £55 million and that it had funding in place for most of 2008 and arranged an expensive £4 billion credit facility with Credit Suisse.

Santander is now the world’s eighth-largest bank and has been on the lookout for acquisitions for some time. Emilio Botín, Santander’s chairman, said he wants to increase its presence in countries with sizeable stakes.

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