The Lloyds TSB-HBOS proposed takeover highlights a number of the issues we have been focusing on during the first few sessions of the A2 course. - The vulnerability of firms once their share price comes under pressure from the markets
- The impact of a merger/takeover on the vulnerable company (Will the Chief Executive of HBOS survive? How many jobs will be lost? How will the business be rationalised?)
- The economies of scale that can be exploited by the new business (“..significant cost savings can be made…”) Will some of these be passed on to customers?
- What impact will it have on competition in the banking market? The government is likely to relax the competition rules even though “…the enlarged group will hold a third of the UK mortgage market”.
Links:
Black Horse becomes White Knight - good graphic showing decline in HBOS share price price
Lloyds TSB unveils HBOS takeover
Profile: Lloyds TSB and HBOS
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