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NatWest rejects final bids
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February 1, 2000: 11:03 a.m. ET
Shareholders likely to split over rival offers for U.K.'s number three bank
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LONDON (CNNfn) - England's National Westminster Bank rejected the final, increased takeover bids from two Scottish banks Tuesday as the three-way contest entered the final stretch with the outcome still uncertain.
Bank of Scotland and Royal Bank of Scotland both raised their stock and cash offers before Monday's midnight deadline. NatWest dismissed both as undervalued and "risky", citing the impact that buying NatWest would have on either bank's balance-sheet.
Shares in all three banks fell for the second straight session, indicating that investors have no strong feeling that either aggressor has served up a knockout bid. NatWest (NWB) shares dropped 1.1 percent, Royal Bank (RBOS) fell 4.5 percent and Bank of Scotland (BSCT) shed 3.6 percent.
NatWest's defense strategy, based on promises to sell assets and return surplus cash to shareholders, was also expected to fall short of majority support.
Bank of Scotland, which started the bidding last September, raised its offer for the second time Monday after London stock trading closed, Royal Bank having lifted its bid earlier in the day.
The Bank of Scotland offer was valued at around 24.1 billion pounds based on Monday's closing prices, slightly above the Royal Bank offer. Royal Bank hiked its offer by 12 percent and boosted the cash element, but was still seen as a disappointment by analysts which increased the chances of a split verdict by NatWest shareholders.
Royal Bank is still seen the more likely to secure agreement from NatWest management. Analysts at Salomon Smith Barney recommended investors to back its bid in a research note published Tuesday. The bank said it was a "close call" but added that "the balance of risk and return marginally favors Royal Bank of Scotland".
NatWest shareholders have until Feb. 14 to choose between the competing offers and the bank's own defense. 
-- from staff and wire reports
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