5th February 2001 - Action groups' disquiet at indecent haste in Equitable Board's acceptance of Halifax bid - Press release

The Equitable Members' Action Group (EMAG) and the Equitable Life Members Help Group, the only independent action groups without any IFA association (with a combined membership exceeding 6,000), today expressed deep concern on behalf of ALL members at the indecent haste shown by the board in accepting Halifax's bid - which is seen to be derisorily low and part of which looks like being recouped at policyholders expense.

Chris Headdon, The Equitable's newly promoted M.D., has been negotiating for weeks with The Halifax. With apparently only one bidder left in, this deal can only be described as on "fire sale" terms. But on Friday night GE Capital re-surfaced. This should surely have been encouraged and at least allowed time to be given a hearing.

The action groups have no dispute with a sale of assets but both of these proposals involve parting with control of the core business - the management of the £30 bn with-profits fund - which is the very essence of The Society.

As such, the action groups argue, any such proposed sale MUST be put to the members for ratification. Since there is no short-term solvency issue time is not of the essence.

The Equitable admins that investment managment costs with Clerical Medical would be higher going forward and fund management would be on commmercial terms. This sounds suspiciously like a clawback of a big chunk of the £500 million initial proposed payment. Chris Headdon has since Christmas been effectively without a board or council. The non-exec known to be most active, Jonathan Dawson (managing director of Lazard) is charged with recruiting a new chairman and final interviews of the short list took place last week. But Lazard are advisors to Halifax, so Mr. Dawson could not participate in recommending The Halifax. The action groups question how involved which board members have been in rejecting out-of-hand in 48 hours over a weekend the GE approach. And the question arises as to what job is left to be done by any new chairman.

Both the FSA and the existing lame-duck board of The Equitable board are, it is suggested, displaying indecent haste in their desire to rush through a deal to take the heat off themselves. But at terms which may not be the best long term deal achievable for the members.

Whilst The Halifax is an acceptable choice of "white knight" the action groups believe that a further guaranteed up-front payment of at least £500m more from Halifax is warranted. Since The Halifax do not propose buying the so-called "black hole, this is arguable THE deal of the new Millenium at the beleaguered Equitable members' expense.

The prospective sale is "subject to regulatory approval" and EMAG will make immediate representations to the FSA to remind them of their duty is to oversee the best interests of the existing Equitable members. Halifax don't want the deal to be put to the members but this is, according to the action groups, totally unreasonable.

They argue that the FSA should impose a short "coling off" period for GE and/or others to develop a bid. And as any deal of this kind would be "a hostage to fortune" which would totally and orrevocably alter the future of the Society, it MUST be made to be the subject of members' approval at an EGM. EMAG has put a questionnaire onto its website to canvass members' reactions to the proposed sale to The Halifax and this can be found at: www.emag.org.uk.