Well, here's an idea that I really had not considered.
Amidst all of the speculation about whether Santander (NYSE: STD) would buy Allied Irish Banks' (NYSE: AIB) stake in M&T Bank (NYSE: MTB) as part of a play to buy all of M&T, Allied Irish took a different path. I had wondered recently whether or not Allied Irish would shop the stake to other banks or whether M&T might band together with Berkshire Hathaway (NYSE: BRK.A) to buy it back from Allied Irish.
Instead, Allied Irish is basically floating the stake into the public markets via a mandatory convertible note that converts into those M&T shares.
It's an interesting move. I am not sure whether it is the best way to maximize the value of that stake for Allied Irish, but it is a relatively quick way of converting that into capital. What's more, it is safe to assume that none of the potential corporate bidders were going to do the deal without a discount, so Allied Irish probably accepted the idea that "fair value" was not going to be full price.
For M&T, this is probably a big load off of their minds - with that stake no longer likely to go to Santander, the near-term pressures to talk about a deal likely dry up. That is not to say that M&T could not still be in play or that Santander suddenly loses interest, but it seems a lot less likely now than before.
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