French bank Credit Agricole has announced that it will not be making a bid for Alliance & Leicester, sending shares in the UK lender plummeting.
Credit Agricole said that it was assessing Alliance & Leicester as a potential acquisition opportunity in May but has now stated that it will not proceed with an offer after analyzing the potential returns that the bank could generate. A&L stock dropped by as much as GBP0.80 on the news, valuing the lender at GBP4.88 billion.
Shares in A&L had been climbing on rumors that it was an acquisition target, rising to as high as GBP1.248 in the past few months with analysts suggesting that Credit Agricole was contemplating a GBP1.300 per share offer. Until the announcement, A&L was the best performer on the nine-member FTSE 350 Banks Index this year.
Group chief executive Richard Pym said: The announcements by Credit Agricole have not diverted Alliance & Leicester from our focus on delivering our strategy and we welcome the clarification today’s announcement provides. We continue to progress well against our strategic objectives as we become the UK’s leading direct bank.