The board of Virgin Money has accepted a £2.9bn takeover offer from high street rival Nationwide to create the UK’s second-largest provider of mortgages and savings.
The takeover, which Virgin Money agreed to on a preliminary basis earlier this month, would create a combined group with some 700 branches – second only to Lloyds Banking Group – and assets of roughly £366.3bn.
Virgin Money chief executive David Duffy will step down from his position following the completion of the takeover, the firms announced. He is due to be succeeded by Nationwide CFO Chris Rhodes.
The deal is set to deliver Virgin Money shareholders 220p per share, a 38 per cent premium on its stock price immediately before the offer was first announced.
Nationwide’s takeover would net Richard Branson a payout upwards of £400m, considering his 14.5 per cent stake in Virgin Money and licencing deals over the brand.
The deal will now be put to a vote among Virgin Money’s shareholders, requiring more than 50 per cent approval.
Virgin Money is set to keep operating as a separate legal entity within the Nationwide group, with a separate board and banking licence.
Nationwide said that while it recognised the “significant role” the Virgin name had “played in the development of Virgin Money over time”, both firms had agreed that after four years, the business would have two years to rebrand.
Virgin Money has around 7,300 staff, while Nationwide has 18,000. The building society said it did not expect to make any “material changes” to the size of Virgin Money’s workforce in the near term.
Nationwide has extended its “Branch Promise” to 2028, pledging not to close any branches, including those of Virgin Money, barring circumstances “outside of our control”.
Nationwide chief executive Debbie Crosbie said: “This acquisition strengthens Nationwide and means we can offer more value and broader services for our current and future members. More people will experience the benefits of mutual ownership and the customer-focused approach of a building society.”
Duffy commented: “The proposed combination with Nationwide presents an exciting opportunity to build on Virgin Money’s significant strategic and operational progress, including the consistent growth in our retail and business customers, deposits and target lending. Together the combined group can offer more great products and services to a larger customer base.”