Paul Hastings, Freshfields and Addleshaws lead on Coventry Building Society’s £780m Co-op Bank acquisition

Deal to create lender with £89bn balance sheet and nearly five million customers

Paul Hastings, Freshfields Bruckhaus Deringer and Addleshaw Goddard have been called in to act in Coventry Building Society’s £780m acquisition of The Co-operative Bank from its hedge fund owners.  

Addleshaw Goddard is acting for Coventry Building Society (CBS) in the deal, while Freshfields is advising Co-op Bank and Paul Hastings is acting for the bank’s sellers, which include the likes of JC Flowers and Bain Capital Credit.  

The cash deal, expected to complete in the first quarter of 2025, is set to create a group with a balance sheet of £89bn and nearly five million customers.  

The Paul Hastings team is being led by M&A partner Matthew Poxon along with senior associate Matthew Calvert and associate Silas Raggett. The team also includes financial regulation partner Nina Moffatt and tax partner Jiten Tank.

Meantime the Freshfields team is being led by partners Sundeep Kapila and Nick Jones, supported by senior associates Lisa Flanagan and Bethan Rodden. Other partners working on the matter include Jill Gatehouse (tax), Holly Insley (employment), Charles Magoffin (pensions), Peter Allen (finance) and Richard Lister (IP/IT), with financial regulatory advice provided by counsel Mac Mackenzie.

The Addleshaw Goddard team acting for CBS is being led by Ben Koehne, head of the firm’s building societies and mutuals practice, alongside fellow corporate M&A partners Oliver Broomfield and Hardeep Plahe and a core team including corporate managing associates Victor Oderinde, Faye Wiles and Jack Edwards and associates Jemima Clarke and Jagpal Pahal.

Co-op Bank, which lends to consumers and small businesses, said late last December that it was in talks with CBS about a possible merger following non-binding offers from rival bidders.  

The deal continues a wave of consolidation this year among UK lenders vying for market share, including Virgin Money’s £2.9bn takeover by Nationwide, the UK’s largest building society, with Magic Circle firms Clifford Chance and Slaughter and May called in to advise the respective parties.  

CBS, which is the UK’s second largest building society, said the Co-op Bank deal would increase its share of the mortgage market as well as give it a position in the personal current account and business banking markets.

CBS will fund the acquisition from its existing cash reserves, with Co-op Bank expecting to pay a dividend in the current financial year.  

Up to £125m of the acquisition cash will be deferred for three years from the deal’s completion subject to Co-op Bank’s performance and the terms of the share purchase agreement, CBS said in a statement.  

CBS chairman, David Thorburn, said the tie-up would create “a stronger mutual business that will deliver in the best interests of our current and future members”. Thorburn will lead the combined group as chair alongside chief executive Steve Hughes.  

Co-op Bank will become a subsidiary of CBS upon the deal’s completion and will continue to operate with a separate independent board.  

KPMG and JP Morgan Cazenove are acting as financial advisors to CBS on the matter, while Fenchurch Advisory Partners and PJT Partners are financial advisers to Co-op Bank.  

News of the acquisition comes amid a surge in global M&A after dealmaking dropped to a 10-year low in 2023. Global M&A volumes rose 38% in the first quarter compared to the same period last year to nearly $800bn, according to LSEG, though deals are taking longer to complete amid tougher regulatory scrutiny.

Freshfields placed 14th in the global M&A legal advisor rankings by deal value in the opening three months of the year, working on deals worth nearly $50bn. The firm placed seventh in the rankings for 2023 after working on $278.3bn of deals, giving it the distinction of being the highest-placed non-US firm.  

Paul Hastings and Addleshaw Goddard were not among the top 25 firms included in the rankings for 2023 or Q1 2024.

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