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That looks too good to be true. And the normal investing rule is that if it looks too good to be true, then don't touch it even if pink gold cartier love bracelet you're in a radiation proof suit.


But normal rules don't apply right now.


There's a wonderful quote in this morning's Guardian from an unnamed "major" investor, who said to that newspaper: "the market is suggesting that the deal is not going to happen. And the market is usually right."


The market is usually right? Where has he or she been for the past few years?


In that period, the market has been comprehensively, systematically wrong about almost everything. But don't get me started.


I feel a burning desire to find out whether this "major" investor is by chance looking after my pension, because if so I might as well top myself.


To be clear, however, I am not saying the terms of the deal won't be renegotiated.


That'll depend on one thing and one thing only   whether the two banks fear that the deal will be voted down by Lloyds TSB's shareholders.


Now, there's a 50% to 60% overlap between cartier love bracelet white gold the shareholders of the two banks.


And if those shareholders were being rational, they would vote for it   because they are simply exchanging one load of paper, their HBOS shares, for another load, Lloyds TSB shares, and the terms of the exchange should be irrelevant to them.


For Lloyds TSB to do the deal, it needs a simple 50% majority of those voting in a poll of its own shareholders.


In spite of the noise from a few recalcitrant shareholders, it's not obvious that the majority won't be secured.


What's more, the date for the vote hasn't even been fixed yet. And markets are so volatile, there's a risk that any revision of the terms at this second would have to be unscrambled again in a few days.


For both boards, it's time to put on the tin hats and explain to their shareholders why the terms were set as they were only a few days ago.


Which implies that those investors betting that Lloyds will massively reduce the price may be burned.


Maybe there will be a downward tweak in the value of the offer. Maybe not.


Markets are exhibiting all the symptoms of madness, so it's conceivable that right now there is an opportunity to buy pound notes for rather less than their face value.


Comment number 1. At 08:53 1st Oct 2008, LiptonGASC wrote: Robert it is worth remembering that deal spreads are usually set by the actions of arbitrageurs but with the ban on short selling they are unable to buy HBOS and sell Lloyds as they would normally do.


It is therefore wrong for people to read to too much into how the HBOS/Lloyds spread is trading becausd they are trading as two independent stocks.


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Comment number 2. At 08:54 1st Oct 2008, Menedemus wrote: This comment was removed because the moderators found it broke the house rules. Explain.


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Comment number 3. At 08:57 1st Oct 2008, LivermoreJr wrote: Ah. Where is a short seller when you need one. If you think the deal is going through you need to buy HBOS AND sell Lloyds   but shorting is not allowed. To buy HBOS outright might be OK   unless all bank shares suffer.


I think the deal does go through unchanged   too much invested in this for anything else to happen. The big owners of shares will not rock the boat.


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Comment number 5. At 08:59 1st Oct 2008, LivermoreJr wrote: Menedemus, the BOS in HBOS is not the RBS that bought ABN AMRO. although your views about pigs cartier white gold love bracelet and pokes may still be correct.

Created: May 19 · Admin: ROOTTF

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