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The deal that nearly never was


The sale of a stake in Landsbanki to Samson will take place in two stages. Following the completion of a purchase agreement - due on around November 20 - 33.3% of the shares in the bank now owned by the state will be delivered to Samson. The remaining 12.5% stake will change hands a year later, bringing the state's stake in Landsbanki down from 48.3% to 2.5% by November 2003.

The total consideration will be IKr12.3 billion ($138 million). This implies an average net present price per share of Ikr3.91, 6% above the 90-day average price. The acquisition price will be paid in dollars which will be primarily used to pay down foreign debts of the state treasury.

There were sighs of relief around Reykjavik when the deal was announced. The government had managed to paint itself into a corner by making ambitious promises to complete bank privatization by the end of this year. That proved a much harder task than it had expected.

Early attempts to find a foreign bank to take a strategic stake in Landsbanki or Búnadarbanki foundered. Nordic banks, preoccupied with larger and more complex domestic and regional mergers, took little interest in the small Icelandic market.

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