Bank of Ireland will this week appeal direct to shareholders in Abbey National with a pledge to pay a cash premium worth £1bn to £1.5bn if its bid for the UK mortgage bank succeeds.
The decision to go over the heads of the Abbey board and spell out the details of Bank of Ireland's bid follows the rejection of its offer last week.
Despite its determination to proceed with the bid, Bank of Ireland yesterday ruled out launching a hostile takeover.
But it wants to quash suggestions that it made a nil-premium bid and will reveal it is prepared to offer cash to shareholders as part of the deal.
The Irish bank hopes this will mean shareholders will be able to see for themselves the "logic and sense" behind the deal. It believes the Abbey board dismissed its offer without communicating its potential benefits to shareholders and hopes to generate enough support from shareholders to force Abbey's board in to re-opening talks.
Abbey yesterday said it would look again at Bank of Ireland's offer if new compelling information was revealed. National Australia Bank, Abbey's only other suitor, last week withdrew from takeover discussions.
Bank of Ireland also wants to show shareholders that a merger with Abbey would produce cost savings and revenue gains. The offer could value Abbey at 750p a share, a 20 per cent premium on Friday's closing price of 622p.
Abbey insists that a number of its largest shareholders were sounded out before the board decided to reject the bid.
Sceptics say the cash premium that is being discussed would not amount to a big enough sweetener for shareholders, once the amount was divided up between the 1.4 billion Abbey shares in issue.
A spokesman for the bank yesterday denied reports Abbey was looking to sell off Scottish Mutual, which has been a drain on the group's capital.
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