Two players left in EBS takeover chase

IRISH Life & Permanent (IL&P) and US private equity group JC Flowers are now being seen as the probable last two players in the chase to acquire the EBS Building Society.

A little over a week ago, the deadline for EBS bids passed. At that point, it was understood that at least four players – IL&P and three private equity houses (TV3 owner Doughty Hanson; US giant JC Flowers; and the Dublin-based Cardinal Asset Management) were in the frame.

Media reports over the course of this weekend suggested that the two Irish bidders – IL&P and Cardinal – are likely to be the parties left standing when the bids process gets formally whittled down further. However, according to one industry source, that picture is likely only to feature IL&P and JC Flowers.

It is thought that the EBS sales process will see the shortlist of interested parties reduced to two potential buyers ahead of formally being completed before the end of the year – with either October or November being the likely month when EBS’s ownership structure finally changes.

IL&P – through its retail banking division, Permanent TSB – is still being viewed as the favourite to emerge victorious, mainly due to its existing non-NAMA associated Irish banking status and its chances of providing a platform for a so-called ‘third force’ in Ireland’s bank sector – after which it would share ownership of the building society with the Government.

EBS needs nearly €900m in fresh capital before the end of this year and it is also thought there is a greater chance of less of that money having to ultimately come directly from the state if the building society is taken over by a banking group, rather than a private equity house. The prospect of a private equity group buying EBS has also previously raised concerns over the potential for wholesale job losses at the company.

Meanwhile, IL&P publishes its first-half financial results today. Analysts have already forecast a year-on-year widening of the financial services group’s first half operating losses from €51m to €92m. The group’s life business is expected to show a loss of €91m (up by around €8m from the same stage last year); with the focus being on new business volumes and margins.

IL&P’s share price was down by over 4% – or 6c – at €1.39, yesterday.