Rock 'facing bid battle'

03-12-2007

Rock 'facing bid battle'
Beleaguered lender Northern Rock could soon be at the centre of a bidding war for its business, according to a report.

Chancellor Alistair Darling has asked the troubled Newcastle-based lender to consider two renewed bids for the company, according to the Financial Times.

Reports US private equity groups JC Flowers and Cerberus have submitted revised offers for Northern Rock come after the bank named a consortium led by Sir Richard Branson's Virgin group as its preferred bidder last week.

The FT claims the chancellor believes the prospect of a bidding war for the company would help achieve the best outcome for the taxpayer, with government funds currently backing the billions of pounds worth of cash Northern Rock has borrowed from the Bank of England to date.

An unnamed official, said to be close to the deal, told the paper it made "sense" to have more than one party interested in Northern Rock – both from the taxpayer's point of view and from the standpoint of the lender's shareholders.

The report also claimed Mr Darling wanted Northern Rock to decide on its future by Christmas.

Under Virgin's indicative proposal, £11 billion of the cash borrowed by Northern Rock from the Bank of England would be repaid on the completion of a sale of the firm.

But reports claim JC Flowers' latest bid proposes to pay more up-front cash back to the central bank than Virgin, with Sky News also suggesting the private equity firm is set to hold a series of meetings with the Treasury over its revised plans.

Meanwhile it has also been claimed an additional offer could emerge within the next few days from investment firm Olivant, which is headed by former Abbey chief executive Luqman Arnold.

Rumours a bidding battle could break out over the future of Northern Rock come after two of the lender's key shareholders, investment management firm RAB Capital and hedge fund SRM, indicated their opposition to the Virgin bid. Concern has been expressed the consortium offer undervalues the lender and does not provide acceptable terms for investors.

Moves to decide Northern Rock's future come after the lender found itself at the centre of the first run on a British bank in almost 150 years in September.

The damaging incident occurred after Northern Rock was forced to turn to the Bank of England for an emergency loan, having been unable to raise sufficient funds on the wholesale money markets due to a global credit crunch.

Bookmark with:
Bookmark with: Digg Digg Bookmark with: Del.icio.us Delicious Bookmark with: Reddit Reddit Bookmark with: StumbleUpon StumbleUpon Bookmark with: Google Google Bookmark with: Technorati Technorati Bookmark with: Netvouz Netvouz

Latest News:

Search News
News Front Page
Accountancy / Tax
Advertising / PR
Armed Forces
Automotive
Aviation / Aerospace
Banking / Finance
Charities / Voluntary
Childcare / Youth
Construction / Property
Customer Services
Education / Training / Teaching
Emergency Services
Engineering / Electronics
Entertainment / TV / Theatre
Graduate Roles
Health / Beauty
Hotel / Catering / Restaurants
HR / Recruitment
Insurance / Pensions
International / Overseas
IT / Internet
Legal
Management / Business
Manufacturing / Industry
Media / New Media / Creative
Medical / Healthcare
Pharmaceutical Industry
Public Sector
Retail / Wholesale
Sales / Purchasing / Marketing
Science / Technology
Secretarial / PA / Admin
Skilled / Semi-skilled Manual
Telecommunications
Transport / Logistics
Travel / Tourism / Leisure