Bank merger

Charter Court and OSB in advanced discussions over merger




The boards of Charter Court and OneSavings Bank (OSB) have confirmed that they are in advanced discussions regarding a possible merger.

Under the proposed terms, OSB would acquire all the issued and to be issued ordinary share capital of Charter Court on the basis of an exchange ratio of 0.8253 new OSB shares for each Charter Court share.

It is claimed that the possible merger would establish a leading UK specialist mortgage lender with greater scale and resources to deploy on growth opportunities, and a diversified retail-wholesale funding platform.

The boards of Charter Court and OSB also believe that the possible combination would create an opportunity to maintain two leading, independent broker distribution platforms to create an enhanced proposition to the broker community.

Commenting on the news, Nick Field, director at international mid-market M&A firm Livingstone, said: “As the UK specialist finance market is undoubtedly experiencing some reduction in demand arising from economic uncertainty, consolidation presents a compelling opportunity to deliver incremental profitability independent of market growth.

“Because both businesses lend across a relatively full range of specialist products and have each invested to develop both retail and wholesale funding capabilities, we would expect operating costs to be the primary area of short-term synergy opportunity.”

Upon completion of the possible merger, OneSavings Bank shareholders would hold around 55% of the combined group, with Charter Court shareholders holding approximately 45%.

Andy Golding, CEO at OSB, has been proposed as the likely CEO of the combined group.

If the ongoing discussions are successful, the boards of OSB and Charter Court are expected to recommend the possible merger to their respective shareholders.

Both boards believe the possible merger has the potential to create material shareholder value. 

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