Battle over Midshires pounds 10m

Andrew Verity
Tuesday 02 June 1998 23:02

A DISPUTE broke out yesterday between Royal Bank of Scotland and Birmingham Midshires over who had insisted the building society pay pounds 10m extra if it links up with the Halifax.

RBS yesterday released Birmingham Midshires from a pounds 630m offer made last August, which included a clause blocking the society from talking to other bidders. In return, Midshires agreed to pay RBS pounds 5m.

But the former partners appeared strongly at odds yesterday over who wanted Midshires to pay a further pounds 10m if it was bought by the Halifax. Any other bidder woud require a payment of just pounds 5m, giving the appearance of a "poison pill" for the Halifax.

RBS executives said the bank wanted an extra pounds 10m no matter who bought the society, but said Midshires executives had turned them down.

But a Midshires spokesman described this as "nonsense", pointing to a letter written by the group's chief executive, Dr George Mathewson.

Midshires said Royal Bank had wanted the payment - but only if it the buyer was the Halifax. He cited a letter, dated 20 May, in which Dr Mathewson wrote to his opposite number at Midshires, Mike Jackson, to suggest the Halifax payment.

The poison pill may disrupt negotiations with Halifax, which has bid pounds 780m, because it gives the bank a small disadvantage against other bidders. Bank of Ireland, which bought Bristol & West for pounds 600m last July, has already said it is interested in another UK mortgage lender.

The Halifax said: "It would be premature to say anything before talking to the board. We are confident that our offer represents full and fair value for Birmingham Midshires."

Midshires also appeared to invite further bids, raising the prospect of a blind auction. Mike Jackson, chief executive, said: "The board will consider any other proposals which it receives from third parties alongside the society's other strategic options, which include flotation."

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