Nationwide to purchase Virgin Money financial institution for £2.9bn

Nationwide Building Society has agreed phrases with Virgin Money UK for a possible all-cash takeover deal value round £2.9billion, creating certainly one of Britain’s largest banks.

Should the deal go forward it should see Nationwide stay a constructing society, the lender stated, however with an expanded suite of services, and higher scale and monetary power.

The 220p per share provide, which contains a 118p money consideration and a 2p per share dividend, is at a premium over 38 per cent to Virgin Money’s undisturbed share worth as of 6 March.

Any deal wouldn’t be topic to the passing of a decision by Nationwide’s members.

Virgin Money shares soared by round 36 per cent to 216.2p by midmorning on Thursday. 

The mixed group will management whole belongings of greater than £366billion, and whole lending and advances of virtually £284billion, representing the second largest supplier of mortgages and financial savings within the UK.

Chairman of Nationwide Building Society Kevin Parry stated: ‘A combination with Virgin Money would accelerate Nationwide’s strategy and create a stronger, and more diverse, modern mutual.

‘The combination would increase Nationwide’s scale and financial strength, put us in a stronger position to continue to provide Fairer Share Payments to eligible Nationwide members, and offer rates for mortgages and savings that are, on average, better than the market average.’

Nationwide, which is Britain’s largest constructing society, highlighted the scaling alternatives provided by Virgin Money’s place because the nation’s sixth largest retail financial institution.

It additionally famous its bank card enterprise, which controls an 8.6 per cent market share, and its £9billion of current enterprise lending balances.

Nationwide stated it doesn’t intend to make any ‘material changes’ to Virgin Money’s 7,300-strong full-time headcount ‘in the near term’ and would ‘safeguard the existing contractual and statutory rights of Virgin Money employees, including pension arrangements and redundancy policies’.

Debbie Crosbie, Nationwide CEO, added: ‘We believe the combination would create a stronger and more diverse business that will be better placed to deliver value to our members and customers, both now and in the future.’

Virgin Money stated the deal would see the group profit from Nationwide’s ‘scale and pace of invesment’, in addition to the constructing society’s capability to leverage its ‘capabilities and strengths’.

Chairman of Virgin Money David Bennett stated: ‘The Board of Virgin Money is pleased that Nationwide recognises the considerable strengths and opportunities that exist across our business, with the potential acquisition delivering attractive value for our shareholders.

‘We are confident that a combination would support an exciting new chapter for Virgin Money to benefit from Nationwide’s scale and ambition.’

Commenting on the deal, Susannah Streeter, head of cash and markets, Hargreaves Lansdown, stated: ‘A mutual taking on a listed financial institution is a uncommon transfer, however Nationwide clearly doesn’t need to be caught up to now and needs the know-how and entry to scoop up future clients who demand extra cutting-edge monetary providers. 

‘The Virgin Money board is minded to simply accept the deal, which at a 38 per cent premium to yesterday’s closing worth, will not be stunning given the difficulties confronted by the corporate over the past yr amid swirling cost-of-living pressures rising bank card arrears. 

‘There can be some hand-wringing once more over yet one more listed firm leaving the London Stock Exchange. Valuations are weak, weighed down by the extremely sluggish economic system, and to some extent the lingering results of Brexit.’