Shares of HBOS PLC, the beleaguered mortgage lender that accepted a takeover bid from rival bank Lloyds TSB Group, fell 9 percent Tuesday, amid market rumors that Lloyds may try to pay less than previously agreed.
Lloyds agreed to pay 12 billion pounds ($22 billion) for HBOS on Sept. 18. The all-stock takeover deal promised to give HBOS shareholders 0.83 shares in Lloyds for every HBOS share held.
But the ongoing global market turmoil since the takeover was announced has seen HBOS' market value fall to 129 pence ($2.33) per share Tuesday. Lloyds, on the other hand, saw shares rise by 5.6 percent on Tuesday to 230 pence ($4.16).
As a result of the growing spread in the two companies' share prices, the takeover deal is representing an increasingly bad value for Lloyds. As of midday, buying HBOS at the agreed rate would cost Lloyds as much as 45 percent more than the market valuation.
The deal won't be sealed until Lloyds shareholders vote to go ahead with it, and analysts say that at this premium, they are likely to vote no.
"Shareholders are going to want to renegotiate the deal," said Richard Hunter, head of British equities at Hargreaves Lansdown Stockbrokers. "The current market view is that in mathematical terms it just doesn't make sense."
Neither HBOS nor Lloyds would comment about a possible renegotiation. Both said they were going ahead with the takeover process.