Home responds to Police & Nurses merger rejection

Home Building Society Ltd has announced it will continue to examine merger opportunities with Police and Nurses Credit Society Ltd, despite its target refusing to meet with them.

An announcement released today by the company said it maintained the view that its offer, of either $215 million-worth of shares or $243 million in cash, was a reasonable offer for the company, based on the information available.

This was despite of the PNCS/Ernst & Young valuation of $420 million, which the credit society recently revised to a net worth of $450 million.

According to Home, PNCS have indicated they were unwilling to meet with the company to either discuss the proposal, or to put it to members.

A statement released by PNCS on October 6 supports that statement, with PNCS chief executive Fred Huis saying at the time that the society was concerned about the loss of mutual status, and stating that the offer was undervalued.

The full text of today's announcement from Home is pasted below

On Friday October 6, 2006, Home Building Society Ltd received a letter from Police and Nurses Credit Society Limited which informed Home that the Board of PNCS had rejected the offer of September 25 2006.

The PNCS letter indicated both the Board and Management were unwilling to meet with Home to discuss the proposal further and that they did not plan to put the offer to PNCS Members.

The letter also contained responses to a number of assumptions made by Home in formulating its offer.

Home is of the view that its offer was both fair and reasonable based on the information available in the PNCS FY06 accounts. Should PNCS be able to provide Home with additional information that demonstrates tangible value upside, then Home is willing to incorporate this into its proposal. This remains difficult while PNCS refuses to meet to discuss the matter in detail.

Home remains committed to capturing the opportunity presented by a merger with PNCS and releasing value to the PNCS Members. Home is reviewing the additional information provided in the PNCS letter of October 6 2006 while it considers the most appropriate means of pursuing the merger between Home and PNCS.