With its bid for Canterbury Building Society shares falling short of its target, Christchurch-based Property Finance Group has failed to secure the strong position it hoped to gain before initiating merger negotiations.
PFG's $5 a share stand in the market, which was extended twice, closed yesterday having secured
11.6 per cent of Ashburton based CBS. It was aiming for 19.9 per cent.
Grant Williamson of Christchurch brokerage Hamilton, Hindin, Greene was not surprised PFG had fallen short of its target.
"That was always going to be on the cards. It's a pretty tightly held stock."
Both companies are NZAX-listed non-bank mortgage lenders, with PFG being a relative newcomer with a less conservative balance sheet than the long established Ashburton-based CBS.
PFG had hoped to merge with CBS citing better growth prospects for the combined businesses.
Yesterday, CBS chairman Graham Kennedy said PFG's proposal, which it has yet to detail, was not without merit.
"Aggregation in the industry is probably imminent."
Kennedy said the introduction of the "approved deposit taker" regime for the non-bank financial sector would favour larger operations and there were also economic benefits from achieving greater scale. But CBS remained unsure about PFG's intentions.
"The problem I have in this circumstance is the cultures of the two organisations are poles apart and at this stage they haven't provided us with any more than public information as to whether there's good things or bad things in it for us so it's too early for us to have a view."
He anticipated having further discussions with PFG.
