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NatWest won't extend bid
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October 6, 1999: 12:01 p.m. ET
Letting Legal & General offer lapse in defense against Bank of Scotland
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LONDON (CNNfn) - Britain's National Westminster Bank, in a move seen as giving it more breathing space to fight a hostile takeover bid by Bank of Scotland, Wednesday said it won't extend a $17 billion bid for insurer Legal & General when it expires Oct. 11.
Britain's third-largest bank has faced a strategic crisis since the Scottish bank launched its surprise $40.4 billion bid on Sept. 24, just two weeks after NatWest announced its friendly bid for Legal & General.
Analysts said the likeliest outcome now is that the offer will lapse. That would end NatWest's aim of creating a "bancassurance" institution -- melding its traditional banking operation with L&G's insurance and asset management arms in an attempt to boost margins with seamless selling of financial products.
Legal & General (LGEN) shares fell 2.2 percent to 170 pence Wednesday after suffering heavy selling pressure in recent days as the chances of the NatWest deal progressing dimmed. The stock had climbed as high as 205 pence.
NatWest (NWB) shares were off 0.6 pence at 1,439 pence and Bank of Scotland (BSCT) lost 1.2 percent.
Royal Bank of Scotland (RBOS), viewed as the leading candidate for a possible counterbid for NatWest, lost 1.2 percent. Mortgage bank Abbey National (ANL), another contender, was up 0.8 percent. Both stocks posted sharp gains Tuesday.
NatWest refused to confirm it will drop L&G -- a prerequisite of the Bank of Scotland offer -- though analysts said such a decision would give it more time to concentrate on a defense strategy or secure a white knight to fend off the hostile bid.
That defense is reported to include divesting non-core assets in a bid to improve its efficiency, one of the poorest among the major U.K. banks.
Bank of Scotland is widely expected to flesh out the details of its bid before the end of the week -- after which NatWest will have 14 days to respond. 
-- from staff and wire reports
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