Abbey to give bid terms

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The Independent Online
Abbey National could spark a bidding war today when it unveils terms of its pounds 1.1bn bid for the National & Provincial Building Society.

Rival Alliance & Leicester is considering making an offer valuing N&P at an eventual pounds 1.6bn, but Abbey says it feels no pressure to raise its offer.

Peter Birch, Abbey's chief executive, has been at pains to play down the hostile nature of Abbey's approach to N&P a month ago. The bank issued a public statement saying it was prepared to pay "a substantial premium to net asset value" to N&P's members.

Alistair Lyons, N&P's chief executive, said yesterday his irritation at the way Abbey seemed to be sidestepping the board to appeal to its members would put N&P off. "While we were very surprised at Peter Birch's action, we will not allow it to colour the board's judgement on the Abbey's offer."

Coopers & Lybrand, the accountancy firm that audits both Abbey and N&P, denied any potential conflict of interest because of the perceived hostile nature of Abbey's approach.

Under Takeover Panel guidelines, public limited companies engaged in hostile takeover bids are not allowed to use the same independent financial adviser. Auditors would only fall under this ban if they also provided corporate finance advice to the companies. The panel pointed out yesterday that since N&P was a building society, it fell outside its jurisdiction.

Coopers itself said it had separated the two audit functions, with Abbey being dealt with in London and N&P in Leeds. The accountancy firm said such duplication was normal - KPMG audits both the Halifax and the Leeds, whose members vote on their own proposed merger on Monday.

A spokesman for N&P said: "We are quite happy there is no conflict of interest. We trust Coopers' professionalism."

N&P directors and staff are bracing themselves for Abbey's proposals. There have been unconfirmed suggestions Abbey would sack all N&P's directors and many of the 4,500 staff.

There was further talk at the conference in Birmingham yesterday that Alliance & Leicester may launch a merger proposal with N&P, possibly joined by Nationwide, with the option of converting to a bank.