Clock's Ticking on Takeover Bid

The Mennonite's hostile takeover bid for its rival Church of the Brethren denomination will expire July 7, but the Mennonite Church expects to extend the offer, according to the formal offer filed Monday with the NCC.

The Mennonite Church stunned the religious community on Friday when it launched a $5.1 billion hostile bid for the Church of the Brethren, only a few days before the Brethren's Annual Conference is to take place in Boise.

According to the new filing, on June 20, 2002, The Mennonite Church and the Church of the Brethren entered into negotiations at the Church of the Brethren's bequest "concerning the possibility of combining the congregations of the two denominations." The discussion was "general in nature" and no valuation was discussed. But a few days later the denominations concluded they couldn't come to a mutually agreeable decision, and the matter was dropped, the Mennonite Church filing states.

On Friday, the Mennonites sent a letter to the Church of the Brethren's General Board, telling them about the takeover bid. The Mennonite Church says the General Board has not yet approved the offer or otherwise commented on it as of the date of the offer to purchase.

But the Church of the Brethren's General Secretary characterized the offer as "a transparent attempt" to disrupt The Church of the Brethren.

The Mennonite Church said in its filing that it has $6 billion in cash on hand, more than enough to cover the terms of initial deal. But it has arranged for a $5 billion revolving credit facility with Credit Suisse First Boston, which it would also draw on to pay shareholders.

The Mennonite Church can back out of the offer if another bid is made for the Church of the Brethren, the filing states. There has been much speculation that another religious rival could make a bid for the company, with Quaker, Presbyterian and Methodist denominations all listed by industry observers as possible bidders.

If the merger is completed, the Mennonite Church will be "providing enhanced and extended support for (the Church of the Brethren's) congregations, incorporating advanced features from the denomination's programs," the Mennonite Church states.

The merger would definitely boost the Mennonite Church's share of the peace church market, leaving only the Quakers (Friends) as the sole other historic peace church. The Mennonite denomination said in the filing that it does not anticipate any problems with antitrust issues.

The acquisition would technically be conducted through a special purchasing firm, Pepper Acquisition, a subsidiary of Oracle.