HSBC Acquires Household

In a surprising move, HSBC PLC, the world's second largest banking company has acquired Household International for $16.15 billion. In large part the acquisition seems to be designed to achieve a better balance in its worldwide portfolio of financial institutions. Data from HSBC demonstrate the balancing effect:

HSBC's profits attributable to shareholders were $3.28 billion in the first half of 2002, just slightly below those in the first half of 2001. If the boards of directors of both firms approve the acquisition, Household's shareholders will receive 2.675 shares of HSBC for each share of Household. On the day of the announcement, Household's stock rose 24.4 percent.