HBOS Shares - Am I Missing Something?

[nivrip]

Am I missing something?



I have about 500 shares in HBOS, acquired at no cost when there was a demutualisation some years back. I have received a letter today asking if I would like to buy some more shares in the company in what they call an “Open Offer” (whatever that means). Yes, this is a company which has lost more than 90% of its share price, which seems to have no credibility and has cut its dividends by a huge amount.



They suggest that I buy shares at a set price of 113.6 p, generously giving an 8.5% discount on the closing price of 10 Oct. 2008 which was 124.2p. The strange thing is that at present I can buy the shares on the stock market for 67.5p. So why would I, or anyone else, take up their offer?



Also there is a note stating that it is very likely that HBOS will be taken over by LloydsTSB very soon and that HBOS shares will be converted to Lloyds shares at a ratio of 1:0.6. So, what is the point of buying HBOS shares when it would surely be easier to buy Lloyds shares and save all the carry on of the changeover?



There is, of course, the option of NOT buying the shares.



There must be someone else out there who has received this wonderful offer and I wonder what your views are on this. Can ANYONE enlighten me?

 

[Adywebb]

In a nutshell - don't take up the offer and buy shares at todays price if you want to either top up your current holding to average out the price.

This Open Offer was put in place in October when obviously the price was higher and represented a saving - since then the price has dived and as you say you might as well buy straight from the market if you need to - but they had to set an offer price on a particular date when the offer was made henece the higher price.

This paragraph is worth reading

Before making any decision to acquire Open Offer Shares under the Placing and Open Offer, investors should consider both the HBOS share price and the Lloyds TSB share price in the market at that time, in the light of the the Open Offer Share subscription price of 113.6p per share being equivalent to an implied price of 187.77p per Lloyds TSB Share. HBOS Shareholders who have any doubt about what action to take, should consult their independent financial adviser.

I sold my HBOS shares before last Xmas at over £8 a share