Nationwide in £3bn swoop on FTSE 250 financial institution Virgin Money:
Nationwide and Virgin Money have agreed to hitch forces to create the second greatest financial savings and loans group within the UK.
The constructing society pays 220p a share, or £2.9billion, for Virgin Money, which was arrange by Richard Branson in 1995 and pays the tycoon to make use of the Virgin identify.
The proposed deal will create a enterprise with £366billion of property and virtually 700 branches as Nationwide steps up its battle with the large High Street banks.
Nationwide will proceed to make use of the Virgin Money model till not less than 2030 however finally the identify will vanish from the High Street.
The plan will see yet one more FTSE 250 agency depart the London inventory market following a wave of mergers and acquisitions.
Nationwide, led by chief exec Debbie Crosbie (pictured), pays £2.9bn, for Virgin Money, which was arrange by Richard Branson in 1995
After being based by Branson, Virgin Money expanded with the acquisition of Northern Rock from the Government after the 2008 monetary disaster. Virgin Money was later purchased by Clydesdale and Yorkshire Bank for £1.7billion in 2018.
In the ‘medium-term’, Virgin Money will probably be a separate authorized entity inside the Nationwide group, with a separate board and banking licence.
There will probably be no adjustments to Virgin Money’s 7,300 staff ‘in the near-term’, the announcement mentioned.
Nationwide’s supply of 220p per Virgin Money share was a 38 per cent premium to the financial institution’s closing value on Wednesday.
Virgin Money shares rose 35 per cent, or 55.65p, to 214.7p yesterday.
The constructing society’s mutual members don’t have to approve the deal for it to go forward. But it does want the inexperienced gentle from Virgin Money shareholders. The board has mentioned it’s ‘minded to recommend’ the supply to traders.
Nationwide chief government Debbie Crosbie mentioned: ‘Nationwide will remain a building society and a combined group would bring the benefits of fairer banking and mutual ownership to more people in the UK, including our continuing commitment to retain existing branches.’
AJ Bell funding director Russ Mould mentioned: ‘Nationwide is effectively pouncing on Virgin Money at a time when prospects are improving for its industry.
‘This is slightly unusual as companies often buy rivals at precisely the wrong time – namely acquiring at the top of the market when everything looks good and then overpaying for deals, rather than taking bold steps and acquiring when everything looks bad and valuations are weak.’
He added: ‘We might get interest from other parties now that Nationwide has thrown its hat into the ring, or shareholders might push for a better price.’
Susannah Streeter, head of cash and markets at Hargreaves Lansdown, mentioned: ‘A mutual taking over a listed bank is a rare move, but Nationwide clearly does not want to be stuck in the past and wants the knowhow and access to scoop up future customers.’
Barclays mentioned final month it might purchase Tesco’s banking operations and it’s thought Nationwide’s swoop on Virgin Money may spark additional merger and acquisition exercise.
‘With the outlook for the UK economy stabilising, we wouldn’t be shocked to see extra offers like this,’ mentioned RBC Capital Markets analyst Benjamin Toms.
