Building society-merger plan backed

CBS Canterbury and the Loan and Building Society have received independent backing for their merger proposal – and say they will not be distracted by the possibility of a future super merger.

The societies have played down any involvement of Auckland's Southern Cross Building Society (SCBS) in the merger process, saying the two-way tie-up will take a year to bed down.

That could put a damper on the immediate aspirations of Southern Cross "Rich List" members Geoff Ricketts, Robin Congreve and Christopher Mace towards industry consolidation.

The Ashburton-based societies are also keeping details of the appraisal reports – which says the two-way proposal is fair – private for the moment.

"We do have to provide the shareholders with full detail but that will be done in due course ... we wouldn't want to release that to the press at this point," LBS chairman George Brown said.

"We've got to give the information in statutory form so we can't pre-release it," he added.

Brown played down any potential super-merger with SCBS. SCBS has 13 per cent of CBS and 8.9% of LBS.

"Once we get the (final version of merger) documents, we'll probably want to ask them as one of the major shareholders what their views are. They're not unsupportive of the (merger) proposal but they're really only a shareholder."

There had been "no discussions at all" on a potential super-merger.

"From our point of view it's not on the radar really. They at this stage – as we've said many times – are only shareholders.

"Right at the moment we've got our merger bedded down. We don't have any intentions of a super merger ... if you're going to merge two longstanding building societies it's going to take time to get that all in place."

It was likely to take a year from now to get the merger bedded down with the required efficiencies, he added.

Brown said February 1, 2008 was the target date to get the CBS-LBS merger into a combined society into a a legal format.

The societies say the proposed merger terms treat the two – with total assets of $530 million – on an equal basis. CBS has been selected as the continuing listed entity, but the merger and conditions must be approved by shareholders.

The independent appraisers are PricewaterhouseCooper (PWC) on behalf of CBS Canterbury members and Grant Samuel & Associates on behalf of LBS members.

PWC and Grant Samuel have stated that, in their opinion, based on their initial assessments of the proposed transaction, the terms of the proposed merger are fair to members of CBS Canterbury and members of LBS respectively.

Brown said there was "not a whole lot of detail" in the two assessment papers, but that PWC and Grant Samuel no doubt had got "the papers" to give basis to the backing.

PWC and Grant Samuel had judged the past performance and future performance of both societies, and had tried to place a value on the respective businesses.

Their appraisal reports would be included in a 150-page overall merger document containing projections to be mailed to shareholders next month before separate December meetings of both societies to vote on the merger.

CBS and LBS would hold briefings in Christchurch and Ashburton late next month to update members and depositors on the latest information about the merger proceedings.

CBS chairman Graham Kennedy said he was delighted another milestone in the process had been reached.

- © Fairfax NZ News