CBS directors say won't sell into Propertyfinance stand

By NZPA

Thursday 25th January 2007

Canterbury Building Society directors do not plan to sell into a $6.5 million on-market stand for 19.9% of its shares by Propertyfinance Group, and said talk of a merger was premature.

PFG said yesterday it would pay $5 per share, a 20% premium to CBS shares' Tuesday close of $4.16. PFG said the two companies were similar, both specialising in non-bank first mortgage lending.

However, in a letter to shareholders today, CBS directors said that while the company fitted PFG's aspirations for fast growth, it was a larger company and had posted a profit in 2006, against PFG's net loss.

"Discussions on a merger are therefore premature at this stage," CBS chairman Graham Kennedy said.

"The offer is recognition of the strength of CBS Canterbury's strong market position in Canterbury at a time when there are expectations of business aggregation in the financial sector."

CBS directors would carry out due diligence on PFG, "to satisfy themselves that the operations and business culture of the PFG enterprise would be compatible with the proven and prudent growth strategies of CBS and that any corporate development added value to CBS shareholders," Kennedy said.

"Although CBS Canterbury directors do not intend accepting the PFG offer for themselves, they request that individual shareholders seek their own professional advice as there may be circumstances where the offer should be accepted."

PFG said yesterday it had no intention of launching a full takeover bid for CBS but wanted to talk to CBS' board about future joint growth opportunities.

PFG has instructed Forsyth Barr to act for it in the market stand, which closes on Friday.

CBS shares were untraded today, having ranged between $3.98 and $4.34 in the past year. PFG shares closed yesterday at $1.30.

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