By Eva Mathews and Sinead Cruise
LONDON (Reuters) -Coventry Building Society has offered to buy Britain’s Co-operative Bank for 780 million pounds ($971 million) in cash, in the latest attempted tie-up among UK lenders jostling for market share amid fickle demand for loans.
Talks on terms of the deal are advanced, the companies said on Thursday, adding they are working on a definitive agreement.
The deal would create a group with a pro-forma balance sheet of 89 billion pounds as at Dec. 31, the companies said.
Co-op Bank, which lends to consumers and small- and medium-sized businesses, said late last year it was in exclusive talks with Coventry Building Society about a possible merger, following a number of non-binding offers from potential bidders.
A deal between the mid-sized players would likely restore Co-Op’s mutually owned status and quash concerns about its future after it was carved out of the Co-operative Group in 2017.
A year ago, Reuters exclusively reported that Co-op Bank had tasked PJT Partners and Fenchurch Advisory to devise ways to create value for its owners, a consortium of hedge funds including GoldenTree Asset Management, JC Flowers & Co and Bain Capital. News of exclusive merger talks with Coventry Building Society followed in December.
Building societies like Coventry are mutually owned by members rather than shareholders, and those members typically have different benefits and ownership rights than stockholders.
On Thursday, Coventry said its members would not be invited to vote on the proposed tie-up, echoing a decision by larger rival Nationwide on another deal.
Last month, the boards of Nationwide and Virgin Money (LON:) UK said they had agreed terms on a 2.9 billion pound deal that would create Britain’s second largest provider of mortgage and savings products.
Coventry is due to hold its annual meeting later this month where talks on whether members should be entitled to vote on the proposed merger with Co-Op Bank are expected to take place.
($1 = 0.8013 pounds)
