Credit union target for hostile takeover
Wings Financial of Minnesota is attempting to swoop in and nab El Segundo-based Continental Federal Credit Union in what many believe would be the first hostile takeover in credit-union history.
“The way they are going about this is unprecedented in our industry,” said Tom Glatt, president of Continental Federal. “The offer was unsolicited, unwelcome and unwarranted.”
Wings on Friday sent a letter to Continental’s board, spelling out its plan to combine the credit unions by paying each of Continental’s 25,000 members $200.
Wings, which has 110,000 members and $1.6 billion in assets, also is attempting to bring its case directly to Continental’s members at www.continentalwings.com. The website aims to compare the savings and loan rates of the two institutions to show how members of Continental, which has $176 million in assets, are likely to come out hundreds of dollars ahead with a combined company.
“A merger between Wings Financial and Continental will benefit the members of both organizations,” said Paul Parish, president and chief executive of Apple Valley, Minn.-based Wings. “The rates and terms offered by Wings Financial are so much more attractive from a market perspective than what’s offered by Continental that they hardly compare.”
Credit unions are owned by their members, so acceptance of the deal by Continental’s depositors and debtors is key.
Glatt maintained that Wings’ comparisons were highly selective and that the Minnesota-based credit union charges its members twice as much in fees as does Continental.
“At best, the information they have put out there is misleading and inaccurate,” Glatt said. “They cannot serve our members better than we can.”
Why, with all the credit unions in all the world, would Wings so desperately want Continental?
Credit unions are membership organizations bound by their charters to let in only certain types of individuals. In Wings’ case that’s employees of airlines and airports and government workers who deal directly with regulation, administration or security of airlines, airports and air transportation.
Continental Federal, which represents employees of Continental Airlines, fills the bill. And its headquarters is only blocks away from Wings’ El Segundo branch. The two credit unions also overlap in half a dozen other cities, including Houston and Newark, N.J.
Glatt said that Continental’s board would review Wings’ latest offer but was not optimistic that it would agree to the deal.
“We have been approached by them three previous times, and we indicated each of those times that we were not interested,” he said.
If the board rejects the offer, Continental’s members could petition for a special meeting and second review. But the company’s board would have to approve the deal before it would go for regulatory approval and a member vote.
Even Parish acknowledged that getting a deal approved without the board’s support would be a long shot.
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