CORPORATE-CONTROL IN THE UK BUILDING SOCIETY SECTOR - AN EXAMINATION OF FAILED MERGERS

In this article we focus on the market for corporate control in the UK building society sector. The universal mutuality of this sector prote cts societies from external bids but there is a buoyant volume of intr a-sector take-over activity. We examine the trends in this activity an d discuss why external growth is strategically chosen by societies. An additional facet of take-over activity which we consider is mergers w hich are abandoned. Using two case studies we examine ex ante reasons why the proposed mergers appeared attractive to the societies concerne d and conjecture as to why ex post they failed. Our analysis suggests that, in one of our cases, although ex ante assessment reveals potenti al benefits, ex post the revelation of further information on the fina ncial base of one of the societies made it an unattractive merger part ner. For our other case we are unable to establish the existence ex an te of potential benefits and conclude that the attainment of large siz e was a major motivational force.