Subject to contract and
ongoing discussions
THIS
ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
FOR
IMMEDIATE RELEASE
Coventry Building Society and The Co-operative Bank Holdings
Limited
18 April 2024
JOINT STATEMENT REGARDING
POTENTIAL CASH ACQUISITION
of
THE CO-OPERATIVE BANK HOLDINGS LIMITED
by
COVENTRY BUILDING
SOCIETY
The Boards of Coventry Building Society ("CBS" or the "Society") and
The Co-operative Bank Holdings Limited (and The Co-operative Bank
p.l.c. together the "Bank") are pleased to
announce that non-binding heads of terms have been agreed for a
potential acquisition of the Bank by the Society for a total cash
consideration of £780 million (the "Potential
Transaction").
Discussions relating to the
Potential Transaction are well advanced, the Society has completed
substantive due diligence to its satisfaction and the parties are
working together to enter into definitive agreements in due
course.
There can be no certainty at this
stage that an acquisition of the Bank will occur and the Potential
Transaction remains subject to the
agreement of terms in a manner satisfactory to the parties. The
Potential Transaction would also be subject to regulatory
approval.
Strategic rationale
A combination between the Society
and the Bank is expected to both deepen the enlarged group's
existing presence in mortgages and savings and extend the Society's
propositions. The CBS Board believes the Potential Transaction
would be in the best interests of current and future members. It
would:
· Create
a combined group with a pro forma balance sheet of £89 billion as
at 31 December 2023;
· Allow
the Society to leverage its financial scale and a diversified
funding base to:
-
Continue to offer strong member value;
and
-
Enhance investment to continue to deliver
outstanding service across branches, online, telephone and mobile
services;
· Provide CBS with an
established position in the personal current account market
extending the Society's product proposition to meet more of
members' daily needs;
· Broaden the
Society's channels and distribution capabilities including an
enlarged, national branch footprint; and
· Introduce a business savings and current account proposition
into the Society's offering.
The Society would seek to integrate
the Bank gradually over several years, prioritising good customer
outcomes following the completion of detailed planning and
engagement with relevant stakeholders.
The combined group's customers would
benefit from the enlarged range of products and propositions on
offer. It is CBS's current intention that eligible Bank customers
would become Society members over a period of time post
completion.
The CBS Board has considered
carefully whether a member vote is required. Having had regard to
the requirements of the Building Societies Act 1986, and having
taken professional advice, the Board has determined that, if the
Potential Transaction were to proceed, a member vote is not
required. In coming to this decision, the Board has been
informed by member surveys and focus groups which clearly signalled
their priorities as maintaining our value proposition and service
quality.
In addition, the Society has
consulted with a number of other stakeholders in recent weeks
including regulators and certain ratings agencies to inform its
evaluation of a Potential Transaction.
Other matters
The cash consideration necessary to
satisfy the Potential Transaction in full would be funded from the
Society's existing cash resources at completion. The £780
million cash consideration excludes capital in excess of certain
thresholds at completion. In addition, of the total cash
consideration, up to £125 million will be deferred for a period of
3 years subject to the future performance of the Bank.
Chief Executive Officer of Coventry
Building Society, Steve Hughes commented:
"This is an exciting
moment for the Society. We have a very successful history, and we
believe this could be the basis of a very successful future - with
membership, great value and great service at its
heart."
'The Co-operative Bank is a
financially stable, profitable organisation with a shared heritage
and products and services that complement our own.
"Its customers, colleagues,
branches, mortgages and savings balances, and the additional
products and services it provides, will make us stronger and enable
us to continue offering the value and service that matters to
members and customers alike. We're confident that we have the
people, capability and the financial strength to bring both
organisations together successfully over a number of
years."
A further announcement will be made
as appropriate.
This announcement contains inside
information in relation to the Society and the Bank.
Enquiries to:
Coventry Building
Society
Richard Field, Head of
Communications
0800 121 6868
The
Co-operative Bank Holdings Limited
Dan Chadwick, Head of External
Communications:
+44 (0) 7724 701319
Alasdair Todd/Neil Bennett, H/advisors
Maitland
+44 (0)20 7379 5151
Angela Catlin, Head of Investor
Relations:
+44 (0) 7548 965 042
Notifying person:
Gurdeep Boparai
Society Secretary
Coventry Building Society
The person responsible for arranging
the release of this announcement on behalf of The Co-operative Bank
Holdings Limited and The Co-operative Bank p.l.c. is Catherine
Green, Company Secretary
