Corporate partners at Addleshaw Goddard and Allen & Overy (A&O) are in for a busy few weeks with Nationwide’s takeover of the Cheshire and Derbyshire Building Societies slated to complete in as fast a time as possible.
A&O client Nationwide is to purchase the two smaller building societies, which are both being advised by Addleshaws, in a move that will create a society with assets totalling more than £191bn and £122bn of retail deposits.
In normal circumstances the boards of Cheshire and Derbyshire would have had to gain approval from their members for such a deal. However, the Financial Services Authority (FSA) has authorised the boards of the three societies to skip that stage to speed things up on the grounds of protecting investor interests.
A&O corporate partner Richard Slynn, who is advising Nationwide alongside partner Alistair Asher, said: “This is the first time that two transactions of this nature have been done in parallel. There’s a feeling that this transaction will help the mutual sector as a whole, by ensuring [the creation of] a stronger mutual.”
This means more front-end work for the firms, explained Addleshaws financial services partner Adam Bennett.
“We’re busier at the beginning with heavy due diligence,” he said. “When we acted for Portman on its merger with Nationwide, it was announced in September and the circular [went out to investors in] March. The circular will be sent out to Derbyshire members in two weeks time and Cheshire in October.”
Bennett was sanguine about the fact that he will be losing two clients as a result of the merger: “It’s a natural outcome of it but we’re delighted to be chosen. Over time there has been a decline in the number of building societies. When I started work 20 years ago there were 120 mutuals, now [there are] 59.”
Both Cheshire and Derbyshire have suffered challenging years. Cheshire reported a 35 per cent drop in profits this February, while Derbyshire’s annual profits dropped 59 per cent.