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 protects societies from external bids but there is a buoyant volume of intra-sector take-over activity. We examine the trends in this activity and discuss why external growth is strategically chosen by societies. An additional facet of take-over activity which we consider is mergers which are abandoned. Using two case studies we examine ex ante reasons why the proposed mergers appeared attractive to the societies concerned and conjecture as to why ex post they failed. Our analysis suggests that, in one of our cases, although ex ante assessment reveals potential benefits, ex post the revelation of further information on the financial base of one of the societies made it an unattractive merger partner. For our other case we are unable to establish the existence ex ante of potential benefits and conclude that the attainment of large size was a major motivational force