Let me try to explain this as simply as I can. The proposed deal is that HBOS shares should be swapped for Lloyds TSB shares. Each HBOS share would be worth 0.833 of a Lloyds TSB share. Lloyds TSB shares currently cost 235.25 pence each, suggesting that the value of an HBOS share would be 195.96 pence.
The problem is that HBOS shares are currently trading at 126.80 pence, well below the value placed on them by the takeover.
So, if you are a Lloyds TSB shareholder, are you going to vote in favour of buying a company at a price which is well above what 'the market' values it at? Reduce the price, I hear you say. In which case, if you are an HBOS shareholder, are you going to vote in favour of an offer which values your shares at peanuts (even if that is the current verdict of 'the market')?
All very difficult.