How do you save an investment bank from rumor mongers? Take it private, one analyst suggests.

Lehman Brothers, the investment bank whose stock has fallen more than 30 percent this month, has been targeted by the fear-trade just as Bear Stearns was earlier this year, Fox-Pitt Kelton analyst David Trone wrote in a research note.

“We continue to believe that the decline in Lehman’s stock has little to do with the company’s liquidity and balance sheet, but is more based on investors’ pricing in the probability of a Bear Stearns-like run-on-the-bank,” Trone wrote.

Bear Stearns, once the fifth-largest U.S. investment bank, faced a run on the bank in March, and was forced to sell itself.

Trone said “an emergency prohibition of short-selling in brokerage shares is imperative,” but in the absence of such a measure going private was the best bet.

“Without a public stock, there would be no shorting, thus no motivation for rumor-mongering, thus no source to spook their counterparties and creditors,” Trone wrote.

(Photo credit: Reuters)

Alliance & Leicester had increasingly been looking like a takeover target and Spain’s Santander has taken advantage of 75 percent collapse in the mortgage banks’ share price over the past year.

The Spanish bank had made little secret of its ambition to expand in the UK banking sector following its acquisition of Abbey in 2004, having already sniffed round A&L last year.

The move shows Santander’s faith in the UK banking sector, the Daily Telegraph says, and that prudently written mortgages are still valuable. “Halifax-owner HBOS will take some comfort from that. As will the Government and the Financial Services Authority, who are fed up with rescuing or orchestrating the rescue of Britain’s troubled banks,” the newspaper’s banking editor Philip Aldrick writes.

But what about the shareholders?

To those who stuck with A&L throughout its share price downturn the deal is worth 317p per share – they will be getting one Santander share for every three A&L share that they own, plus a cash dividend of 18p per share – still significantly lower than the 12-month high of 1,170p.

They might be well advised to hold on to their shares. According to thisismoney.com, one of Alliance & Leicester’s major shareholders, Standard Life, has given clear advice to shareholders big and small: Don’t sell yet. “Santander wants to buy this bank on giveaway terms,” Standard Life warns. It predicts a higher counter-offer soon.

Significantly, as part of its 1.3 billion pound takeover bid Santander says it’s willing to fund A&L’s 42 billion pounds of mortgage obligations. With economists predicting a fall of as much as 35 percent in house prices from peak to trough, A&L’s reliance on mortgage business was a key factor behind its share price dropping 75 percent last year as the credit crunch started to bite in Britain.

Simon Maughan, analyst at MF Global, has told Reuters that Santander could use the deal to drive through economies of scale to boost profitability at Abbey, which is low relative to its other operations.

The FT’s Alphaville blog points out that apart from obvious cost synergies, Santander’s Emilio Botin wants to accelerate expansion at Abbey. Adding A&L would increase Santander’s share of the UK mortgage market close to 13 percent.

Bank analysts at Lehman Brothers say that Santander is likely to have been attracted by A&L’s 31 billion pounds in deposits, plus the prospect of extracting close to 180 million in cost synergies, the Times said.

On the executive front, one factor that might “oil the wheels” is A&L’s recent appointment of Alan Gillespie, a well-respected industry veteran to succeed the late Sir Derek Higgs as chairman, Management Today points out. “The choice of Gillespie (who A&L pinched from Ulster Bank) was widely seen as an attempt to steady the ship ahead of further write-downs,” the magazine says on its Web site.

Check out a sweetened offer finally sealing the deal.

Anheuser-Busch has accepted a $52 billion takeover bid from Belgium-based InBev NV to create the world’s largest beer maker and end a month-long standoff.

InBev, which makes Stella Artois and Beck’s, agreed to pay $70 per share for the maker of Budweiser, up from its original unsolicited bid of $65 per share. The improved offer marked a 27 percent premium to Anheuser’s record-high stock price in October 2002. 

The deal, which analysts expect to gain regulatory approval, would be the largest in the industry and the third-biggest ever foreign takeover of a U.S. company. 

The combined company Anheuser-Busch InBev would have about $36.4 billion in annual net sales, about 40 percent in the United States, and would brew about a quarter of the world’s beer.

After the merger InBev will regain the world brewing top spot it lost last year to SABMiller, which was boosted by strong growth in China and the purchase of Grolsch, and the newly announced deal could trigger more changes in the beer world.

Analysts believe SABMiller will now look at possible deals with Mexico’s Modelo or FEMSA, Foster’s or Molson Coors, with whom it has agreed to merge U.S. operations.

Also in the basket:

JP Morgan Securities raises Macy’s to neutral

EBay strikes deal with Web retailer Buy.com -NYT

(Additional reporting by Philip Blenkinsop and Martinne Geller)

(Photo: Reuters)

U.S. brewer Anheuser-Busch accepted a hopped-up $52 billion takeover bid from Belgium-based InBev. InBev agreed to pay $70 per share for the maker of Budweiser, up from its original unsolicited bid of $65 per share, both companies said on Monday. The improved offer marked a 27 percent premium to Anheuser’s record-high stock price in October 2002. The deal is expected to gain regulatory approval. It would be the largest in the industry and the third-biggest ever foreign takeover of a U.S. company. Now, let the naming begin. While not nearly as bouncy as Microhoo, the union does lend itself to some intriguing combinations. The company seems to be settling on Anheuser-Busch Inbev. ABI Brewing, or ABIB, could suggest beer drinkers need to protect their shirts. The company could certainly be forgiven for seeking something more mouth friendly. Some DealZone suggestions from reporters who have spent far too much time thinking about it: InBusch, AmBusch, InBever-Busch, AmBever, BudBev or BevBud, lending itself to BevBuddies and BuddyBev.

Spain’s Santander is buying British bank Alliance & Leicester for 1.3 billion pounds ($2.6 billion) in an agreed deal that will bulk up its existing UK bank Abbey. Santander, Europe’s second-biggest bank after HSBC, has long been considered a potential buyer of A&L, but has been able to secure a knockdown price after a collapse in its target’s share price in the past year. Santander said it was offering 1 of its shares for every three A&L shares, plus a cash dividend of 18 pence per share. The deal values A&L stock at 317p, compared with a 12-month high of 1,170 pence. A&L shares soared 54 percent to 338 pence by 1000 GMT after Santander confirmed the deal, reflecting the prospect that a takeover battle could ensue.

GlaxoSmithKline could pay Swiss company Actelion up to 3.3 billion Swiss francs ($3.28 billion) to develop a promising insomnia drug in the largest biotech partnering deal. Glaxo, Europe’s biggest drugmaker, beat many of the world’s top pharmaceuticals companies to partner Actelion’s sleeping pill almorexant and the deal sent the Swiss biotech’s stock soaring nearly 10 percent. “The deal terms already allow significant value to be transferred to shareholders,” said Landsbanki Kepler analyst Denise Anderson. Glaxo, which like other big drugmakers is keen to snap up promising new medicines to bolster its pipeline, had been tipped as a likely partner for almorexant, currently in late-stage clinical development. But some analysts had questioned whether it would go for the deal as it has the only other similar drug in clinical development, on hold in mid-stage trials.

Other deals of the day:
* Australian gaming company Tatts Group has said merging parts of its business with rival Tabcorp might make sense, following tougher state controls on their operations.

* An associate of India’s Kotak Mahindra Group has bought 27.76 percent stake in publisher Business Standard that was held by Great Eastern Shipping, the publisher said at the weekend.

* Israeli holding company Koor Industries said it has accumulated 8.97 million shares of Credit Suisse Group for 1.28 billion shekels ($378 million).

* Israel’s Hadera Paper said it agreed to buy 53 percent of Carmel Container Systems for $20.77 million, to bring its stake in the maker of paper-based packaging to 89.3 percent.

* United Capital Corp said its Chief Executive Officer has offered to buy the company for $23 per share in cash.