Abbey go-ahead for N&P bid

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The Independent Online
Abbey National plans to launch a formal bid for National & Provincial Building Society in four week time after yesterday's "very positive and constructive" meeting with the society.

Abbey said that N&P would hand over an information pack giving confidential figures on arrears, repossessions, staffing levels and other confidential information this week.

The society will continue talking to Abbey as the latter prepares a formal offer, which the N&P board will either accept or reject in May.

Abbey was enthusiastic about the results of the talks while N&P was more non-committal. Only three people attended the 90-minute meeting in a London hotel; Abbey's chief executive, Peter Birch, and N&P's Alistair Lyons and his information technology director.

Mr Lyons said afterwards: "I was surprised that Peter's ideas were not as specifically formed as I was expecting. For instance, what place will N&P business have within Abbey?

"What is the value of N&P to Abbey - just its branches and assets, or its customer franchise? This is important. The ball is in his court."

Mr Lyons added that N&P was in active discussions with other potential bidders. These included institutions that lacked a personal finance distribution network, he said.

Yesterday's discussions followed Abbey's surprise announcement last week that it wanted to reopen bid talks with the UK's ninth-largest building society which stalled a year ago. Abbey said it was prepared to pay N&P's 1.7 million members "a substantial premium to net asset value".

This fuelled City comment that Abbey was preparing the firsthostile bid for a mutal building society.

Yesterday an Abbey spokesman said: "The talks show that we have moved away from any hint of a hostile approach."

N&P made an official announcement saying: "Alistair Lyons made it clear to Mr Birch that N&P retained an open mind about the Society's future strategic direction and that the Board's guiding principle was to act in the best interests of N&P's members."

"All relevant options would be examined carefully by the Board, which would make its recommendations known when it had completed its evaluation."

City analysts said that now was a good time for societies to sell up and get a good price if they wanted to, since there were many institutions, particularily banks, with plenty of spare capital.

There also many firms eager to get into or expand their mortgage businesses.

Hugh Pye, an analyst with BZW commented: "N&P seem to be saying; 'We're not going to be rushed into anything. If Abbey National does want to buy us, it will have to pay a very full price'.

"There is also a risk, which is to Abbey National's advantage, that every society member has a price. People seem to have £500 in mind."

N&P was forced to suspend opeing new savings accounts last Friday aftter thousands of customers deposited millions of pounds in the hope of a cash windfall if Abbey's approach succeeded.

The move was made after discussions with the industry regulator, the Building Societies Commission.

N&P will launch new savings accounts this week offering similar rates of interest but not allowing these customers to vote on an acquisition or receive a payout.

Abbeys shares ended the day down a penny at 464p, after enjoying a run last week.