- The 220p per share offer is at a 38% premium to Virgin Money’s share price
- Combined group will be responsible for almost £366bn of assets
Nationwide Building Society has agreed to buy Virgin Money UK in an all-cash deal worth around £2.9billion, creating one of Britain’s biggest banks.
The deal will see Nationwide remain a building society, the lender said, but with an expanded suite of products and services, and greater scale and financial strength.
The 220p per share offer, which comprises a 118p cash consideration and a 2p per share dividend, is at a premium over 38 per cent to Virgin Money’s undisturbed share price as of 6 March.
Combination: Nationwide Building Society to create one of Britain’s biggest banks with Virgin Money UK takeover
The combined group will control total assets of more than £366billion, and total lending and advances of almost £284billion, representing the second largest provider of mortgages and savings in the UK.
Chairman of Nationwide Building Society Kevin Parry said: ‘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 biggest building society, highlighted the scaling opportunities offered by Virgin Money’s position as the country’s sixth largest retail bank.
It also noted its credit card business, which controls an 8.6 per cent market share, and its £9billion of existing business lending balances.
Nationwide said it does not 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 said the deal would see the group benefit from Nationwide’s ‘scale and pace of invesment’, as well as the building society’s ability to leverage its ‘capabilities and strengths’.
Chairman of Virgin Money David Bennett said: ‘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.’
