|Alliance & Leicester
||EPS - Basic
||Market Cap (m)
Real-Time news about Alliance & Leic (London Stock Exchange): 0 recent articles
|diydan: Thanks to both of you for the info. However I am a bit surpriced it was not fixed on the day of the deal. It would seem to me that the market is wide open to manipulation. For example if AL. had gone up in last month and Santandar gone down the offer would have become a very bad deal for AL. holders and may have said no. The reverse is obviously also true if AL. share price drops faster than Santandar then the holders of their shares may think they are paying too much. I had thought that at the time of the offer shares in both banks would have been suspended? Is there an end date for completion or do they wait till they get 75%
Thanks and regards to both.|
|indomie: Hi All,
Just wanted to check, if banking sentiment improves (and santander's share price rises) that will increase the value of the deal right?
Also, the markets will look alot different in Oct when the deal completes (either better or worse) but if things are looking a bit brighter, couldn't the directors just withdraw their recommendation and pay the £12m break fee instead?
At least for the moment they have put a floor on the share price which was heading further south on sentiment....|
I don't look at accounts, primarily because I don't understand them, but also because I am aware that they are rarely sufficiently meaningful to hang a decent argument on.
Jim Slater was an accountant. Slater Walker was one of the great accounting scams of the 1960/70s. Nearly all of the companies he bought made losses after S-W's purchase of them. Nothing of the sort could be seen in the accounts.
I'm not suggesting there is an irregularity in A&L's accounts, just that the share price, which reflects the opinion of everything that is believed about A&L, accurate or otherwise, is a better basis for valuation. Remember that those whose views are accurate are likely to take advantage of the others. This will correct the share price.|
|keith95: Indieman .... my gripe are the general upbeat comments from AL.
"Alliance & Leicester has made good progress during the first four months of 2008." From may this year.
Reading between the lines ... there has to be some gross problem which AL. have decided not to share with the market which is I believe contrary to their duty to inform shareholders. AL. has not... informed us, so the best we can conclude is that the malaise in share price is down to the wider market which Santander are quite rightly taking advantage of.
Santander are to inject 1 billion cash into AL. If BB. can mange 400 million then AL. should be able to grab the cash it needs from the market given its upbeat statements.
Morover, Sandander point to numerous benefits in taking over AL. which satisifies their "investment criterion"... no surpirse there.
Looking at the number of shares held by AL. management, its no big loss to the majority of them with the exception of two who have significant holdings.
I certainly won't be voting in favour of the offer.... but have seen pretty much the same thing happen with THUS which has been taken over at a large fraction of its true value by C&W under pretty much the same circumstance.
Anyway .. whats done is done: One moves on.|
The argument that the directors turned down higher offers previously is irrelevant to the current situation. If A&L were genuinely able to make the case that they were worth more on a risk/reward basis, rival bidders would be queuing round the block. Equally, if other potential bidders came to that conclusion for themselves, the result would be the same. That, in itself, would push the share price higher even without an actual takeover.
The simple fact that the share price hasn't risen to a level significantly higher than the bid price means that experienced investors, institutional, hedge fund or otherwise don't believe A&L is significantly undervalued on a risk/reward basis.
The main risk is not that A&L are bunkrupt or unable to trade in the short or medium term. It is that in the longer term, A&L might have difficulty borrowing sufficient funds to support the business well enough to generate cashflow to see them trade through their difficulties. Reduced business and steady fixed costs are not a recipe for success in difficult times.|
I am aware of that currently, buy we are not yet into share buy backs either. I have watched other company's struggle to hold the share price at any level if The Shorters know that is a company's game plan. Once the buy back period is over the price slips back to its former downward path. It has to be handled perfectly if its aim is to reverse a share price trend. Hedge funds are very good at playing this game prior to a value for money take over for their total benefit. imo
|forwood: On the contrary, this provides a level of certainty that will help underpin the shares.
If we really thought we could get a 20% return by investing in the shares, it wouldn't have fallen to this historic low! The reason it is here is doom and gloom uncertainty with the likes of BB's capital raising disaster, falling house sales, lower mortgage demand, building companies going to the wall, etc, etc., all fuelling the panic. What if AL needs capital? What if there's more losses to come? What if they cut or pass on the divi altogether?
At 255, a dividend of 35p is a yield of 13.7%, more than enough to tempt any investor. It is a painless way of preserving capital, and will help to reduce if not remove suggestions that AL. will need to raise capital.
Historic yields on other major banks are between 6% and 18%, with the median at 12% (Barc, Lloy, Bank of Ireland). How many more of them will be reigning back on the dividend before the year is out? I suggest you have a look at the expectations for future divis on Digital look. AL. will still be market leading, which improves the likelihood of share price growth relative to peers.
I have to assume that this reduction is enough - that £80m is all the company needs to get it through these troubled times. If that is the case - and if you go through the pain of a divi reduction you may as well get it right first time - then it's very good news indeed!|
|piersyboy2: I was ripped off with my oracle, I specifically asked the wizard for one for financial predictions, and due to a lack of tip on my part and a missunderstanding, I have one that will only predict the trends for soft furnishings. As a result, cannot help with the AL. share price, but moroccan scatter cushions and retro ethenic will be huge in 5 weeks time!, hope this helps.
|harvester: If I was in Daniels position and viewing potential takeover targets I would not be inclined to announce my intention that I was on a buying spree to the public, being aware that such announcements would create takeover speculation. Instead I would wait for a moment of weakness in the targets share price over and above the current discounts on the weaker banks. Then arrange with a trustworthy broker to stage a dawn raid and acquire a sizeable stake in the target which would serve as a springboard for future acquisition if desired . The next step would be to hold friendly talks with the target company to discuss possible merger and request access to the targets detailed accounts .
Having acquired an initial stake at relatively cheap price would also make it harder for competitors to launch competing M&A action . Of course, the dawn raid would drive up the share price and hedge funds etc would scramble for shares to take advantage of any takeover action. However, their time horizon is fairly short and they may have difficulty maintaining the higher speculation price of the target if no follow-up action follows within months, say .
A full takeover almost always involves paying some premium over the pre-bid share price and the major shareholders will not let go easily unless they see the offer as fair in relation to fundamental value and prospects .
Personally, speaking as a Lloy shareholder myself, I think that A&L would make quite a good acquisition for Lloy since its business is more diversified than B&B and has sizeable business in the small corporate sector. Lloy is already heavily exposed to the UK mortgage market and with a UK property downturn expected a bid for B&B whose majority business is in the mortgage market, seems inappropriate .
I have no stake in A&L myself up to now but I was closely studying the annual results and market action after they were released . The sharp drop to 433 or thereabouts on market opening then made it fairly tempting to place a buy order but any investment in A&L, however cheap, remains high risk. They seem to have taken all the right steps to secure their position but the feeling still is that they are living on borrowed time, albeit into 2009, while the wholesale funding of mortgages is curtailed severely. A merger with a cash-rich larger bank would solve that problem and bring benefits to both .
Hence I am presently considering if purchase of some A&L shares at the higher price of 510-520 would provide greater marginal satisfaction than purchase at 433 which I previously had declined. That could well be so , notwithstanding the mars bar comments, after considering the M&A prospects .
If I decide to Buy A&L shares at around 500 the intention would be to immediately arrange a sale of the shares at the same price (500-520)or similar price with a view to secure a gain of about 25%. I know you won't believe me but in the investment world there are more ways than the traditional way of buying and holding shares for ages to secure a profit . The secret is time value and volatility .|
|kenny: Let's put today's Guardian article in perspective. If A&L have to write off £100m that hardly warrants a 40% fall in the share price. Pre-tax profits last year were £569m so a £100m write off is about 18% - pre-growth in profits - and minor compared to the fall in the share price.
The dividend cost is about £235m so, I believe, they can afford to maintain the dividend and even grow it a bit. Also, if one assumes that the position is once again bad in 2008 and requires a further provision of, say, another £100m I still think they can maintain the dividend in 2008 as well.
As these companies announce their sub-prime losses the capital markets should start to re-liquefy so in three years time A&L should have recognised all potential losses.
Therefore, albeit we do not know the "unknown unknowns" I think that overall the position is far from as bleak as the share price indicates. Clearly, the current share price, rightly, contains a lot of "fear" but the sellers who are fearful have or will shortly complete their selling.
The above is a very broad brush analysis and no doubt the institutions who have recently been buying quite a few have come to a similar conclusion albeit theirs in probably based on a greater insight into A&L's various businesses - they are a lot more than a mortgage lender. Capital Companies tends to take long term positions in companies so their holding is encouraging.
I do not have a lot to say in relation to short sellers - they are an established part of the market these days and are not going to curtail their activities. I welcome their involvement as keeping management of these large companies on their toes and offering me an opportunity to buy what, I believe to be cheap high yield shares. As the facts become known they will move on to other easier targets so I am not too concerned to try to discourage or "outlaw" their activities.
I also welcome today's Guardian article because for the first time an ordinary investor like me who has no inside information has some figures to base an assessment upon. Of course, the write-offs may be larger but so might profit growth in other areas and the fact I have allowed for zero growth in the above analysis gives a margin of comfort.
The current unknown is when the capital markets will begin working again. This is a real and current worry but there are some encouraging albeit early signs from the US. I am also encouraged that A&L are not experiencing any problems raising funds albeit I imagine they are paying a high rate of interest I stress high and not punitive. Should the capital markets remain more or less frozen then A&L have the Bradford & Bingley option of selling some of their loans. I would prefer that they got through this period without resorting to that because B&B have effectively sold a part of the source of their future profits for a price that was not very attractive.|
Alliance & Leicester share price data is direct from the London Stock Exchange