Fear drove Household International's decision to
sell out to HSBC last month. Executives and advisers on both
sides have done a good job of presenting the roughly $14
billion deal as an ideal strategic fit for both the US
consumer finance company and the UK banking group. And so it
may prove to be, although as a first step executives need to
sweep away the rumours swirling around at the end of November
that the deal was in danger of collapsing.
But a deal struck at roughly 1.6 times Household's book value
smacks more of desperation than strategy. Household CEO Bill
Aldinger now says that it was always his intention at some point to
link up with a deposit-taking institution. This was not the
preferred timing, though.
The company's stock price closed at $22.45 the night before the
deal was announced, more than $40 lower than its high for the...
