The battle for control of National Westminister Bank intensified last night as Bank of Scotland said it would raise its takeover offer, adding extra cash of 246 pence per share.
The Scottish bank, battling rival Royal Bank of Scotland for control of NatWest, said it was also offering a higher cash alternative to its 1.75 share equity element, including 50 pence per share in cash and 1.66328 Bank of Scotland shares.
The move came just hours after rival Royal Bank of Scotland had increased its bid by 12 per cent, also injecting more cash. Both banks had until midnight last night to revise their offers. Shareholders have to make up their minds by February 14th.
Bank of Scotland said its new offer valued each NatWest share at about 14.41 pence per share, valuing the bank at some £24.1 billion sterling.
The new offer gives NatWest shareholders the option to receive 406 pence per share in cash, amounting to about £6.8 billion.
Bank of Scotland Governor Mr John Shaw said, "We have made available £4.06 of cash per NatWest share, together with the ability to participate in up to 70 per cent of the enlarged group." Mr Shaw said in a statement that Bank of Scotland's offer was the most valuable and straightforward.
The new Royal Bank bid includes up to an extra £3.5 billion in cash, valuing NatWest at £14.90 a share or £24.9 billion ($40.3 billion) if a controversial bonus share issue is included.
Without this issue, Royal Bank is adding up to another 125 pence a share cash, valuing NatWest at 14.25 a share given Royal Bank's closing share price on Friday.
"We have injected more cash into this offer in a way which does not involve dismembering the NatWest business and does not disadvantage any of the shareholders involved," Royal Bank Chief Executive Mr George Mathewson said.
"We talked to the major institutional shareholders and we got the message that they were looking for more cash. We've tried to put something together that meets that transient need for cash," he said.
He said he now expected the debate to focus on the merits of each Scottish bank's plans to improve NatWest's revenues and efficiency.
Mr Mathewson said he expected NatWest to recommend Royal Bank's offer if the February 14th vote was split and Royal Bank had the highest percentage of shares. Royal Bank Chairman George Younger said his door was open for talks with NatWest over an agreed deal, but that he would not approach NatWest.
Royal Bank said it was now offering two alternatives including one with a higher cash element.
The first includes an extra 95 pence of basic cash per share.
The second alternative is for 0.920 new Royal Bank shares plus 450 pence cash a share.
