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Is HBOS In Play?

In a move which looks likely to bail out those underwriters left with billions of pounds of stock after the recent fund raising, HBOS shares have motored past the 275p fund raising price and moved on to the 310p level. There are strong rumours in the City that a consortium is being put together to launch a breakup bid and take apart one of the UKs premier financial organisations.

While the rumours, which centre on UK outfit JP Morgan Chase, have been discounted by many investors the share price has rebounded sharply of late. Even if the JP Morgan Chase rumours turn out to be false there is a chance it may flush out another potential bidder with some of the large US operations said to paying close attention. Even though any possible offer would likely be pitched at substantially higher than the current share price, it is not clear what price the larger institutional investors would demand.

Alternatively there is also a call for the group itself to sell off parts of the business to crystallise shareholder value and try to prove the current share price is not a reflection of the sum of the parts. Ultimately the badly handled fund raising has weakened the reputation of the HBOS management and left open the door for a potential breakup of the group, but whether this actually materialises is a completely different matter.

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