Woolwich could face predators

NIC CICUTTI

Speculation grew in the City last night that Woolwich Building Society could be snapped up by a rival institution before its plans to become a bank are complete next year.

Potential bidders named by analysts yesterday include Royal Bank of Scotland, other high street banks, Prudential and BAT, the tobacco giant.

Tim Clarke, banking analyst at Panmure Gordon, said: "I would be surprised if a number of institutions were not currently looking into the possibility of a takeover bid.

"The announcement that Woolwich is planning to convert to a bank, has raised a lot of opportunities for potential bidders. The society has effectively put itself in play by going public."

Mr Clarke said a potential suitor would find attractions in Woolwich's mortgage lending operation, its 4 million savers and its South-east England bias.

John Stewart, operations director at Woolwich, said there had been some interest by other institutions, but no serious discussions had taken place.

He added: "We have a very good core business with consistent profit records over the years. We have been diversifying very successfully for years and all our subsidiaries are in profit. Obviously, our board has a fiduciary duty to consider any offer but they would have to be prepared to pay a substantial premium."

A takeover bid would create an opportunity of a profit for Woolwich's savers, including those dubbed "carpetbaggers" for trying to speculate on its plans.

Any predator would have to make an offer to all the society's members, not just those who joined it before the December 31 deadline, after which new members miss out on Woolwich's handout of shares.

Any potential bidder has 15 months, until the society's annual meeting in April next year, to make a move. If members agree the demutualisation plans, a bid would become more difficult.

Rob Thomas, building society analyst at UBS said: "Woolwich would have considered this possibility when deciding to make its move. I don't think there are any institutions out there with the resources or the balls to do it."

rWoolwich Prime Gold account holders will qualify for shares in the society's forthcoming flotation next year, contrary to a report in the Independent yesterday. Those who do not qualify are Current Account holders.

Weekend section, page 22

Building society mergers or takeovers

1989 Abbey National - floated

1995 Cheltenham & Gloucester - taken over by Lloyds Bank

Halifax - merges with Leeds Permanent

1996 National & Provincial - taken over by Abbey National

1997 Halifax - to be floated in spring

Woolwich - to be floated in autumn

Who's next?

Alliance & Leicester - flotation announcement expected soon

Nationwide - flotation announcement possible within next 18 months

Bradford & Bingley, Bristol & West, Portman, Britannia, Birmingham Midshires, Yorkshire - flotations may follow more society mergers or may be vulnerable to takeovers