LONDON - Lloyds Bank PLC said it was withdrawing its proposed bid for Midland Bank PLC in the face of the increased bid by HSBC Holdings PLC and regulatory delays. The move cleared the way for HSBC to acquire Midland.
Following a meeting Friday of the Lloyds board, the bank issued a statement saying it "continues to believe that a merger of Lloyds Bank and Midland Bank would have created substantial benefits and would have offered a unique opportunity to reshape British banking for the better.
"But at the price which would now be necessary following HSBC's increased offer, the board has concluded that it would not be in the interests of Lloyds Bank shareholders to proceed."
Scheduling Problem
Lloyds also noted that the U.K. Monopolies and Mergers Commission was not required to rule on its proposed bid until Aug. 25, while HSBC had set a June 25 deadline for its offer and cannot extend that deadline beyond July 7.
On Tuesday, HSBC, the parent of Hongkong and Shanghai Banking Corp., raised its bid to slightly over $7 billion, against the $6.67 billion at which Lloyds' offer was valued when first launched.
'I Am Delighted'
Midland's chairman, Peter Walters, welcomed news of Lloyds' withdrawal. "I am delighted that a source of uncertainty has been removed, and I look forward to the consummation of our merger with HSBC," he said.
The chairman of HSBC, William Purves, said: "The way is now clear for Midland shareholders to accept our offer on or before June 25, and I look forward to welcoming them as shareholders in HSBC Holdings."
