APPLE VALLEY, Minn. -
"Once the payment's gone it kind of makes it difficult to make the offer work," said John Wagner, a spokesman for the $1.6-billion Wings Financial.
Wings, which had been soliciting support of members of the $180-million Continental FCU on a petition urging a member vote on the unprecedented merger, would have had to go back to all of the members who signed the petition and restate the offer absent the $200-a-member provision, making a new offer very difficult, said Wagner. He would not quantify how many Continental members they induced to sign the petition, but said they were making "good progress" in their petition drive.
Officials of Continental FCU expressed their gratitude to the credit union's 26,000 members, to the credit union establishment which overwhelmingly weighed in on its behalf, and to NCUA, which came to its rescue.
"We are thrilled that Wings Financial has withdrawn its merger proposal and ended its attempt to take over our credit union," said Tom Glatt, CEO of Continental FCU, in a statement. "We cannot thank our members, our volunteers and the NCUA enough for their support during the last month, as we battled to keep our credit union independent."
The decision by Wings to withdraw its controversial offer came two days after NCUA notified the credit union that the $200-per-member offer was illegal because it violated provisions of the Federal CU Act which bar pre-merger dividends. Wings had been soliciting Continental members for five weeks, telling them that a merger would provide expanded services and products, as well as additional branch availability-and the $200-a-member payment. The payment-amounting to $5 million-was to come from the excess capital held by Continental, which is sitting on 17% capital or almost $30 million.
But Glatt emphasized all along the excess capital-capital for peers of the $180-million credit union is around 11%-would be used to expand services and add branches for the that has diminishing financial results in the wake of a 20% decline in air transportation workers nationally.
The declining membership base has prompted airline credit unions to broaden their field of membership, with Continental and Wings among four credit unions that have adopted TIP (for trade-wide, industry-wide and profession-wide) charters serving more than one million employees in the nation's air transportation industry.
But for Wings, the former Northwest Airlines Employees FCU, the broader FOM wasn't enough, prompting the acquisition offer for Continental, even after offers to acquire at least two other airline credit unions were rejected.
The board of Continental, which has seen a 20% decline in membership over the past five years and stagnant growth, formally rejected Wings acquisition offer March 9, the fourth time they rebuffed the much larger credit union.
But Wings did not take "no" for an answer and decided to solicit Continental members to force a vote on the deal, the first time a natural-person credit union has launched a hostile takeover attempt.
