Leek United members throw out Murray's pounds 30.5m hostile takeover

MURRAY FINANCIAL, the investment vehicle set up to target mutual societies, suffered a severe setback yesterday when its pounds 30.5m hostile bid for Leek United Building Society was thrown out by the Staffordshire group's members.

Murray, whose board includes John Redwood, the Tories' Trade and Industry spokesman, vowed to press ahead with plans to buy up building societies and convert them into Internet banks, despite being "disappointed" by the Leek rejection. Kenneth Murray, the chief executive, said: "Anyone who knows me, knows that I do not give up easily." It is understood that Mr Murray already has his sights set on a fresh target.

Of the 30,976 votes cast, 8,264, or 14 per cent of Leek's total membership, were in favour of Murray's approach, with 22,712 against. The ballot capped a bitter three-month battle between Murray and Leek, marked by strong verbal exchanges as the Leek board campaigned to fend off the "carpetbaggers".

Members of the 136-year-old society stood to gain windfalls of up to pounds 950 had they accepted the proposal, while Leek staff had been offered an extra pounds 1,000 cash bonus and options on up to 10,000 Murray shares. The predator had also pledged to increase Leek's funds by a factor of ten - from pounds 445m to about pounds 4bn.

Mr Murray said he would not try to force a recount on the grounds of the alleged mishandling of the voting by Leek, backtracking on statements made ahead of the members' decision. He described the process as "shoddy", but said he would accept the outcome with "no hard feelings".

Murray shares, which are listed on the Alternative Investment Market, have been suspended at 13p since it made it first approach to Leek in September. The group has failed to buy anything since it was established18 months ago and its assets have since fallen from pounds 10m to pounds 9m.

Neil McFadden, the Leek United chief executive, said: "We are delighted that our members have voted in favour of an independent, locally run building society and rejected Murray's plans for a plc." Leek has spent pounds 2.75m, about 3 per cent of its reserves, defending itself against Murray.

A spokesman for the Mutual Interest Campaign, a pro-mutual pressure group, said: "I hope our colleagues at the Portman, Skipton and Chelsea building societies [facing demutualisation votes] will be heartened by today's news at Leek."