MIDLAND GROUP
Sir Peter Walters
Chairman
To: Shareholders and (for information only) participants in the share option and profit sharing schemes of Midland and the holders of Midland subordinated unsecured loan stock.
Midland Bank plc
Head Office
Poultry
London EC2P 2BX
11 June 1992
Dear Shareholder,
Recommended Final Offer for Midland by HSBC Holdings
This document contains the terms of HSBC Holdings' Final Offer, about which I wrote to you on 4 June 1992. That letter explained why your Board is recommending you to accept the Final Offer.
Since I last wrote to you, Lloyds has announced that it will not proceed with its proposed offer for Midland. Accordingly, Midland shareholders can now consider the recommended Final Offer from HSBC Holdings without the uncertainties associated with Lloyds' proposals.
Final Offer terms
HSBC Holdings is now offering 120 new HSBC Holdings shares and £65 in either new HSBC Holdings bonds or cash for every 100 Midland shares. This offer values each Midland share at 449p and Midland at £3.7 billion. It represents an increase of 77 per cent. over the Midland share price before our merger talks were announced on 17 March 1992. You should note that the HSBC Holdings Final Offer will not be increased in any circumstances and the closing date is 1.00 p.m. on 25 June 1992. Details of the Final Offer are set out in the letter from Schroders on pages 9 to 18 and the financial effects of acceptance are set out on pages 12 and 13.
HSBC Holdings has now obtained all the major regulatory clearances necessary for it to proceed with its offer, including competition and bank regulatory clearances.
The right strategy for Midland
The Board of Midland has, from the outset, expressed its strong support for the business strategy and future prospects underlying a merger with HSBC Holdings. Your Board believes that a merger with HSBC Holdings offers the unique prospect of the creation of a UK-based major international banking group with strong core regional franchises in Europe, the Far East and North America.
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Registered in England Registered number 14259 Registered office
Poultry London EC2P 2BX A member of Investment Management Regulatory Organisation Limited