Sign in Subscribe
Banking industry

Halifax to Acquire Birmingham Midshires in £780m Deal

Strategic Insights

— 1 min read

Halifax, one of the largest building societies in the UK, is poised to announce the details of its agreed takeover of Birmingham Midshires this week. The deal, valued at £780m, would result in an extraordinary general meeting later this year to approve the acquisition. If successful, over one million members of the Midshires could receive windfall payouts of around £800 each.

Key Takeaways:

  • The takeover deal values Birmingham Midshires at £780m, £150m more than Royal Bank of Scotland's earlier offer of £630m.
  • The terms of the deal are less favourable to the society than the original offer from Royal Bank, which included a three-year jobs guarantee for the Midshires' 2,200 staff and a guarantee to keep the Midshires brand.
  • Halifax will have to pay a mini poison pill of £10m to bid for the society, a condition demanded by Royal Bank's group chief executive, George Mathewson.
  • Mike Jackson, chief executive of Birmingham Midshires, is expected to step down when the deal goes through and pursue an academic life.
  • A formal offer is likely to trigger an auction for the society, with bank of Ireland and Lloyds TSB showing interest in expanding their share of the UK mortgage market.
  • If the deal is approved, Halifax will see its share of existing mortgages rise to 20 per cent, fueling fears among unions that Halifax may try to close a substantial proportion of Midshires' 112 branches.

Statistics:

  • The takeover deal values Birmingham Midshires at £780m.
  • The original offer from Royal Bank of Scotland was £630m.
  • The Midshires' 2,200 staff could face a three-year jobs guarantee if the deal does not go through.
  • The number of Midshires' active members who could receive windfall payouts is over 1 million.
  • The potential payout per member is around £800.
  • Halifax's share of existing mortgages would rise to 20 per cent if the deal is approved.

Sources:

  • "Halifax to unveil pounds 780m Birmingham Midshires bid on Thursday" by [Unknown author], The Times, [Undated]
  • "Building society deal could spark auction" by [Unknown author], [Undated]
  • "Halifax Steps Back From Pledge to Preserve Midland Bespoke Brand" by [Unknown author], The Financial Times, [Undated]

Read more