A Forced Sale

Today Alliance & Leicester, the mid cap mortgage bank announced they were in detailed takeover talks with Santander of Spain.

The shares duly shot up over 45% (though are still massivley down on the highs achieved in 2007). I had been happy to continue holding A&L as they had issued no cash calls like many of the other UK banks, and the dividend looked as though it would be held.

However, with an offer price agree at £3.18 (I think) I decided to sell at the higher market price of £3.28. Why? When looking at the bid in more detailed terms it became apparent the offer was for Santander shares (1 for every 3 A&L share held). I've already held Banco Santander shares following the takeover of Abbey National in 2004 and I sold them earlier this year - so I had no desire to hold a new batch that would incur Spanish witholding tax on my dividend income.

I realised a small loss, but at least I have cash in my ISA right now, rather than waiting for shares in October. That assumes the deal is waved through on competition grounds, which cannot be taken for granted.

I've already spent the cash - moving out of the UK over to the US to buy Pfizer - a strong dividend payer in the defensive drugs sector. I've also bought a tranche of shares inb HSBC Infrastructure Company, which are yielding over 5.5% and will provide a steady income stream from all these government PFI initiatives.

So the cash released from A&L burned a hole on my cash balance for all of ten mimutes!

The Dividend Seeker