Resolution meets B&B in attempt to win over board

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The Independent Online

Resolution, the investment fund headed by Clive Cowdery, met with Bradford & Bingley advisers last night in an attempt to convince the mortgage bank to back its bid to take effective control.

Bradford & Bingley's board, overseen by acting chairman Rod Kent, has so far blocked access to its books and refused to recommend the proposal, which would see Resolution inject £400m into B&B in exchange for a 49 per cent stake.

Resolution last night tried to persuade the board to open its books at the meeting with B&B's advisers Goldman Sachs. In particular, Resolution said shareholders would have pre-emption rights in the offer, allowing retail investors to take part.

B&B shares surged 17 per cent to 77.25p as the market reacted to Monday night's news of Resolution's plans. The proposal would in effect give Resolution control of the group and would kick off its plan for a £2bn consolidation drive among the smaller banks. This would scupper B&B's plan to raise £258m through a rights issue and a £179m investment from the private equity group TPG.

Resolution also stepped up its efforts to corral support from B&B investors. A source close to the group talked of "constructive conversations", and said Resolution would meet large institutional investors from today.

The source said the group was working towards filling out its proposals, which would be ready for its proposed 4 July release date. He said: "Our initial approach was rejected, but it seems like the door is still open. The plan is evolving, there is a lot of work going on and we are keen to get in and do some due diligence."

Resolution's move was backed by four of B&B's largest investors, who were understood to be unhappy at B&B's original fund raising plan. These investors comprise Insight, Legal & General, Prudential and Standard Life which, with Resolution, own 17 per cent of the bank's shares.

The Takeover Panel had initially limited Resolution's backing to four investors to protect market-sensitive information from leaking. Since its announcement it is free to target as many institutional holders as it can.

A source close to Resolution said the fund had also been in constant contact with the Financial Services Authority throughout the process, and was not aware of any regulatory issues.

Sources close to TPG said that Resolution's move did little other than bring uncertainty. "The most important thing is that stability is maintained. We have the financing in place and it is the only offer on the table," one said. He added that the group also planned to use the stake in B&B to start a merger drive in the UK banking sector.

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