Bradford & Bingley jumped the most since its initial public offering after Clive Cowdery's Resolution unveiled a plan to buy control of the UK mortgage lender for £400 million ($785 million).
Bradford & Bingley rose as much as 17 per cent, the biggest gain since the IPO eight years ago, and traded up 9.75 pence to 75.75 pence at 10am, valuing the bank at £468 million.
Mr Cowdery, who built London-based Resolution from insurers' castoffs and sold it this year, seeks to trump Bradford & Bingley's plan to raise £400 million by selling new shares in a rights offering and a 23 per cent stake to buyout firm TPG.
Winning the Bingley, England-based bank would be his first step toward "a new, larger and stronger bank" through acquisitions.
The UK Shareholders' Association, formed to represent individual shareholders in Britain, said on June 10th it may ask members to vote against Bradford & Bingley's revised rights offer and agreement with TPG, saying the bank should have considered borrowing from the Bank of England, or merging with a larger bank
before diluting individuals' holdings with new shares.
Mr Cowdery said at least four of Bradford & Bingley's largest investors are backing his bid. He named Standard Life, Legal & General Group and HBOS and Prudential Plc, which all declined to comment today.
Bradford & Bingley rejected Mr Cowdery's proposal late yesterday and reiterated plans to raise £258 million in a rights offering to existing investors at 55 pence a share and £179 million by selling the stake to TPG.
The Fort Worth, Texas-based buyout firm will get a breakup fee of 1 per cent of the value of its planned investment if the deal is canceled. Shareholders are to vote July 7th on the plan.
Bradford & Bingley "carefully considered" Resolution's proposal and told the company June 22nd it won't recommend the plan. Bank spokeswoman Nickie Aiken declined further comment today.
Bloomberg