Nationwide building society is lined up to take over its smaller rival Virgin Money after the pair formally agreed a deal worth £2.9bn.
The acquisition, which will solidify Nationwide’s position as the UK’s second-largest mortgage lender, will also trigger the resignation of Virgin Money boss David Duffy, and is likely to lead to job cuts as well as an official “review” of the combined group’s workforce.
Nationwide chair, Kevin Parry, said: “Following full consideration and the appropriate due diligence, and after taking comments from members into account, the board of Nationwide’s assessment is that the binding offer to acquire Virgin Money is in the best interests of the society and its present and future members.”
While Nationwide has stopped short of offering its own members a vote on the deal – citing UK takeover rules of publicly listed companies – it will still need approval from Virgin Money shareholders.
Virgin Money’s largest investor, Sir Richard Branson, has already indicated that he will back the takeover, which will result in a £724m windfall for the billionaire businessman.
That figure includes £414m from the buyout of his 14.5% stake in Virgin Money, which he founded in 1995, and £310m for the use of the Virgin Money brand, a sum that includes Nationwide paying £15m in annual royalties for the first four years, as well as a £250m exit fee, which will lead to the name disappearing from UK high streets.
Source: Theguardian
