N&P faces £1.1bn Abbey bid


Financial Correspondent

Abbey National is set to offer £1.1bn to buy National & Provincial Building Society later this week. The sealed bid, which could mean average payments to N&P members of about £650 each, is thought likely to face strongest competition from the Alliance & Leicester, which is considering a merger with N&P and then conversion to bank status.

Abbey has consistently refused to comment on its unsolicited approach to the N&P, which it first made public last month.

Peter Birch, chief executive, said Abbey was prepared to pay "a significant premium to net asset value" to N&P's members in order to buy the society.

Yesterday, Abbey, given a deadline of Friday this week to come up with a firm offer, said: "We can't comment on speculation about figures because we are bound by a confidentiality agreement with N&P."

However, City analysts expect Abbey to offer roughly 1.5 times N&P's net asset value. N&P's current net assets stand at £732m, giving rise to an offer of roughly £1.1bn.

Mr Birch has already said he would not anticipate paying as high a multiple as Lloyds Bank did for Cheltenham & Gloucester. Lloyds' £1.8 bn offer for C&G was worth 1.8 times its net asset value, but C&G is a niche provider of mortgages with a relatively small number of branches and has lower overheads than most societies.

Abbey has run into difficulties with its approach to N&P because the building society movement has perceived it as the first ever hostile takeover bid for a mutual society.

Abbey has stressed that there is nothing hostile about the approach but has felt inhibited from talking publicly about details because of the confidentiality agreement.

City analysts point out that following the cash payout offered by the Lloyds/C&G bid, N&P members may be only interested in the £650 they would, on average, be expected to receive under the Abbey's likely offer.

Following the recent spate of interest shown by banks in buying building societies, the societies themselves have reacted defensively.

They would, in the main, prefer to merge with each other and then convert to bank status, making sure the new unit would be large enough to repel any hostile takeover bids as a PLC.

But any attempt by N&P to rebuff Abbey and go for a merger with a society like Alliance & Leicester would run into a time problem. The Halifax/Leeds tie- up is not expected to deliver its share pay-off to members until three years after the original deal was proposed.

Analysts point out that N&P would face an uphill struggle convincing its members to expect jam tomorrow instead of jam today. Abbey hopes the N&P board will give its firm reaction to the approach by the end of June, in which case it could have the deal completed within a year.

A number of other suitors have emerged for N&P. European banks have been mentioned, although if they offered cash under building society legislation, they would not be able to make cash payments to N&P's borrowers.

They would also face difficulties in providing shares to N&P's members.

Other contenders have included the Woolwich, the Nationwide and National Australia Bank, which owns Yorkshire Bank.

National Australia Bank has said it is definitely interested in buying a society in order to increase its distribution in the UK, but it has not decided which society definitely to go for. Other rumours currently doing the rounds include talks between the Woolwich and Bradford & Bingley.

The Building Societies Association annual conference which starts in Birmingham this Tuesday is expected to be buzzing with similar rumours.

One analyst has likened it to "a gigantic dating agency", although a BSA spokeswoman denies this is an accurate portrayal of the event.

The BSA points out that people have far better opportunities to conduct confidential negotiations elsewhere, although this dating agency image had become a part of the conference myth.

The conference itself is likely to see stiff criticism of the Government by society chiefs over its lack of support for the housing market and home ownership in general.

Anthony Nelson, Minister of State at the Treasury, will be addressing the conference as well as Alistair Darling, Labour's spokesman for City and Financial Affairs.

Society chiefs are particularly disappointed by tax changes which make it more difficult for the newly unemployed to get help with their mortgage payments and are interested in what Labour has to say.

Start your day with The Independent, sign up for daily news emails
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?