TNAG-2474-FCO40-3604-Business-matters-in-Hong-Kong-acquisition-of-Midland-Bank-by-1992 — Page 40

Schroders

J. Henry Schroder Wagg & Co. Limited 120 Cheapside, London EC2V 6DS

11 June 1992

To Midland 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

Dear Midland shareholder,

Recommended Final Offer for Midland by HSBC Holdings

1.

Introduction

The boards of HSBC Holdings and Midland jointly announced on 2 June 1992 that agreement had been reached on the terms of a recommended Final Offer to be made by Schroders, on behalf of HSBC Holdings, to acquire the whole of the issued share capital of Midland not already owned by the HSBC Holdings group. This letter contains the formal Final Offer for your Midland shares and is accompanied by Supplementary Listing Particulars.

Your attention is drawn to the letter from your Chairman, set out on pages 5 and 6 of this document, and to the letter from the Chairman of HSBC Holdings, set out on pages 7 and 8 of this document.

As at 8 June 1992 (the latest practicable date prior to the printing of this document) HSBC Holdings owned 15,700,000 Midland shares, a wholly-owned subsidiary of HSBC Holdings owned 114,653,672 Midland shares and three partly-owned insurance subsidiaries of HSBC Holdings owned a total of 297,254 Midland shares. Directors of HSBC Holdings, including Mr. Brian Goldthorpe, who is also a director of Midland, own or have options over a total of 256,693 Midland shares. James Capel and other companies in the HSBC Holdings group (which are presumed to be acting in concert with HSBC Holdings) managed as at 8 June 1992 on a discretionary basis 430,726 Midland shares and call options over 31,000 Midland shares. HSBC Holdings has also received irrevocable undertakings from the directors of Midland to accept the offer in respect of 71,451 Midland shares, representing approximately 0.01 per cent. of Midland's existing issued share capital.

In aggregate, as at 8 June 1992, HSBC Holdings and persons acting in concert with HSBC Holdings owned, managed on a discretionary basis, or had received irrevocable undertakings to accept the offer in respect of 131,158,676 Midland shares and call options over 31,000 Midland shares, representing approximately 16.64 per cent. of Midland's issued share capital.

The Final Offer values each Midland share at 449p and the whole of the share capital of Midland, including the shares owned by the HSBC Holdings group and assuming full exercise of all share options, at approximately £3.7 billion.

The Final Offer will not be increased in any circumstances. The Final Offer will close at 1.00 p.m. on 25 June 1992 unless it has by or on that date become or been declared unconditional as to acceptances. It will not otherwise be extended.

As at 5.00 p.m. on 8 June 1992 (the latest practicable date prior to the printing of this document) valid acceptances had been received in respect of 5,923,961 Midland shares, representing approximately 0.75 per cent. of Midland's issued ordinary share capital. Of these, acceptances in respect of 71,451 Midland shares, were received from directors of Midland pursuant to the undertakings referred to above.

Reg. no. 532081 England. Reg. office at above address. Member of SFA

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