Standard Chartered shares reach 4-year high in takeover talk

Speculations that Standard Chartered, the largest bank in the Middle East, is preparing a new takeover approach sent shares in the British lender soaring to their highest point in over four years.

Standard Chartered stock rose 9.6% to 755p today in early trading amid speculation that First Abu Dhabi Bank planned a bid of as high as PS29B for the FTSE 100-listed lender.

First, Abu Dhabi stated a month ago it had been in the “very early stages of” considering an offer for the London-based company but that it is “no longer doing this”. It is prohibited from making any bid for the group until July under Britain’s takeover rules unless it meets certain conditions, such as rival offers.

However, there are still hopes of a deal after Bloomberg reported First Abu Dhabi and its advisors continued to work on an offer that might be available once restrictions have been lifted. Standard Chartered shares were pushed to the highest level since June 2018, valuing it at PS21 billion by investors.

Standard Chartered is listed in Britain and has its headquarters in London. However, their businesses are based in emerging markets such as Asia, Africa, and the Middle East. It was formed 54 years ago from a merger between Standard Bank of British South Africa, Chartered Bank of India and Australia, and Standard Bank of China.

American chief executive Bill Winters has tried to revitalize Standard Chartered’s fortunes ever since 2015. However, despite drastically cutting costs, this has not resulted in a significant increase in the share price. It is considered vulnerable to takeover. Lloyds attempted a deal in 1986, and Barclays and Chinese banks were all mentioned as potential suitors over the years.

First, Abu Dhabi would be transformed by a takeover, becoming the UAE’s largest bank and a major player in emerging markets. Its assets exceed $1 trillion.

Recent gains in oil prices have brought about a boom in the Middle East. Standard Chartered’s takeover is one way these petrodollars can be put to good use. First Abu Dhabi shares close state ties. Mubadala is Abu Dhabi’s sovereign wealth fund with a 38% stake. The emirate’s ruling families are also major shareholders.

Financial watchdogs will likely closely scrutinize any offer to buy the British bank. It is overseen and classified by international regulators, as a global systemically important bank.

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