The potential merger between Coventry Building Society and the bank aims to bolster the combined entity's presence in mortgages and savings, while expanding the former’s offerings, resulting in an enlarged group with a pro forma balance sheet of £89 billion as of 31 December 2023
Co-operative Bank set to be acquired by Coventry Building Society. (Credit: The Co-operative/Wikimedia Commons)
Coventry Building Society, a financial institution based in England, has offered to acquire British banking company Co-operative Bank in an all-cash deal worth £780m.
In this context, the boards of the two entities have agreed to non-binding heads of terms for the potential transaction.
The cash consideration does not include capital exceeding specific thresholds upon completion. Moreover, a portion of the total cash consideration, amounting to up to £125m, will be deferred for a period of three years, contingent upon the future performance of the bank.
According to Coventry Building Society, discussions regarding the possible deal are in an advanced stage, with the society having conducted thorough due diligence to its satisfaction.
The parties are collaboratively working towards finalising definitive agreements in the near future, said the society.
However, at this stage, there is no certainty regarding the completion of the acquisition of the bank, said Coventry Building Society.
Besides, the potential transaction is contingent upon reaching agreement on terms satisfactory to both parties and obtaining regulatory approval.
Discussions between the parties about the deal was announced in December 2023 by Co-operative Bank.
Co-operative Bank was founded in 1872. For the 12 months ended 31 December 2023, the banking company reported underlying profit of £120.9m and total income of £515.2m.
The potential merger between Coventry Building Society and the bank aims to bolster the combined entity’s presence in mortgages and savings while expanding the former’s offerings.
The enlarged group will have a pro forma balance sheet of £89bn as of 31 December 2023.
Coventry Building Society CEO Steve Hughes said: “The Co-operative Bank is a financially stable, profitable organisation with a shared heritage and products and services that complement our own.
“Its customers, colleagues, branches, mortgages and savings balances, and the additional products and services it provides, will make us stronger and enable us to continue offering the value and service that matters to members and customers alike.
“We’re confident that we have the people, capability and the financial strength to bring both organisations together successfully over a number of years.”