LONDON -- HSBC Holdings PLC raised its offer for Midland Bank PLC to $7.06 billion on Tuesday, from $5.97 billion.
The new bid, which values each Midland share at $8.60, up from $7.32 previously, also adds a cash option.
HSBC, the parent of Hongkong and Shanghai Banking Corp., said it was now offering to exchange 120 new HSBC shares for every 100 Midland shares. It is also offering $121 worth of new HSBC bonds or the same amount of cash.
Criticism Is Met
Previously, the offer was for an even swap of shares, along with a new HSBC bond.
The addition of a cash alternative addressed a major criticism by investors of the original HSBC offer. A $6.7-billion potential offer from Lloyds Bank PLC included cash.
Lloyd Bank officials disparaged HSBC's new offer, saying it achieves merely "approximate parity" with Lloyds' bid.
Board to Meet Friday
Lloyds said its board would meet Friday to "review the position" and would make a further announcement then.
Lloyds said the new bid by HSBC "only represents a small increase over its previous offer and its value remains heavily dependent upon the HSBC share price, which has recently risen strongly in the highly volatile Hong Kong stock market."
Lloyds noted that HSBC said its offer was final and would not be raised. But Lloyds said it would be able to bid even higher if its proposed takeover of Midland is cleared by U.K. regulators, whose decision is due by Aug. 25.
"A merger of HSBC and Midland Bank would not address the fundamental structural problems facing the banking sector," Lloyds said.
