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A&L encourages shareholders to vote for Santander deal

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by Kay Mitchell

Former building society, Alliance & Leicester (A&L) has sent information to its 564,000 shareholders on the £1.3 billion proposed takeover by Spanish bank, Santander.

Roy Brown, acting A&L chairman, is strongly encouraging shareholders to vote for the deal and has warned if the move is rejected by shareholders, the bank would be exposed to the worsening economic slowdown.

The bank said the A&L Board has concluded that there is a risk of external events further eroding shareholder value and that the value to A&L shareholders of the greater certainty provided by being part of a larger organisation is considerable.

In addition, to gain staff approval, each A&L employee is being offered 100 free shares in Banco Santander should the takeover proceed.

Under the terms of the deal announced last month, shareholders will receive one share in Santander in return for every three A&L shares.

Should the deal proceed as planned later this autumn, A&L will be merged with Banco Santander’s existing UK subsidiary, the Abbey. The Spanish bank expects that merging the A&L with the Abbey will save about £180 million a year in running costs.

Santander, who took over Abbey National in November 2004, is offering 317p per A&L share. The deal will significantly boost Santander’s presence in the UK.

A&L saw its annual profits slump 30% last year due to the turmoil in the credit markets and it has been forced to write-down the value of mortgage-backed investments by almost £400 million.

A&L and its suitor require a 75% vote in favour of the deal by A&L’s shareholders by the deadline of Sunday 14 September.

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News posted: August 19, 2008

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