Sanctuary moves in as Cosmopolitan and Riverside merger talks dissolve
Published by Max Salsbury for 24dash.com in Housing and also in Communities
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Sanctuary Housing Group has suddenly emerged as Cosmopolitan's "new preferred partner" after its chances of a merger with Riverside fell apart.
Cosmopolitan Housing Group (CHG) had been in discussions with Riverside Group Ltd over a possible merger since last year.
However, after a due diligence process came to an end last week, Riverside's board decided that it could not give CHG the unconditional merger offer it requested due to uncertainty over the scale of the potential risk around CHG's student homes leases.
Now CHG has asked Sanctuary to put forward merger proposals.
Sanctuary - which runs around 80,000 homes across England and Scotland - will now begin discussions with CHG's lenders and the freeholders of its student accommodation.
CHG's chief executive, John Denny, said: "We are grateful to Riverside for their support and collaborative working, but understand their decision. Finding an appropriate merger partner has always been about achieving a strong union that would benefit both tenants and partner organisations and we are looking forward to working with Sanctuary to achieve this."
Riverside's chief executive, Carol Matthews, added: "We are proud to have been able to contribute to the development of a positive solution for Cosmopolitan, and sad that it has turned out not to be the right deal for us. We were a good match with Cosmopolitan’s general needs operations and wanted to work with their board, employees and tenants to build on what had been achieved. We wish them, and Sanctuary, all the best with their negotiations."
Sanctuary's chief executive, David Bennett, said: "Sanctuary is pleased that CHG has selected us as their preferred partner which is a reflection of our strength and commitment to the sector. Sanctuary has the skills and resources to drive efficiencies and savings. However, we recognise that if we are to sustain the organisation’s long term future, any deal with CHG’s lenders must support a viable business plan."
Director of Regulation at the HCA, Matthew Bailes, said: "Riverside did all it possibly could to secure a deal, and stepped up when Cosmopolitan and the sector needed them most. We are hugely grateful for their efforts to resolve the serious problems at Cosmopolitan. Ultimately, though, they could not be expected to agree to take on something that was not right for their business. The regulator understands and supports the Riverside Board’s decision.
"We remain very concerned at the difficulties in resolving issues with CHG’s student homes business. However, we think it right that Sanctuary, as a large provider with experience of the student market, has been invited to see if a deal is possible.
"However, it clearly makes sense to plan for any adverse event and that’s what we are doing, and so we are in the advanced stages of planning for a moratorium, and we will do all we can to protect social housing assets."