07 March 2024 , 07:23
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Nationwide Building Society has agreed to a takeover of rival lender Virgin Money in a deal that would be worth around £2.9billion.
If the deal is agreed, Virgin Money would initially run as a separate business within Nationwide, before then being integrated within the next six years. After this point, the Virgin Money name would no longer be used. So far, the businesses have reached a preliminary agreement on the deal. However, Virgin Money customers would not automatically become "members" of Nationwide.
The proposal would create the second largest mortgage and savings group in the UK, worth around £366.3billion and with total lending and advances of about £283.5billion. Nationwide has put forward a 220p a share approach for Virgin Money, including a planned 2p a share dividend payout.
Nationwide said this represents a 38% increase on Virgin Money closing share price on Wednesday. Virgin Money employs about 7,300 people, and Nationwide said it did not plan to “make any material changes to the size of the Virgin Money employee base in the near term.”
Kevin Parry, Chairman of Nationwide Building Society, 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.”
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David Bennett, Virgin Money UK chairman, added: "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."