Nationwide strikes deal to buy Virgin Money for £2.9bn

The building society claims it will not make any changes to Virgin’s workforce “in the near term”.
Nationwide strikes deal to buy Virgin Money for £2.9bn
Virgin Money branchGetty Images

Nationwide Building Society has reached an agreement to buy Virgin Money in a £2.9bn deal which would see the brand eventually disappear.

The deal would create one of the UK’s largest mortgage and savings groups.

Nationwide said it would not make any material changes to Virgin Money’s 7,300 employees “in the near term”.

It said that it would keep using the Virgin Money brand initially but it would be phased out over six years once the proposed takeover is completed.

Nationwide is UK’s biggest building society with more than 17 million customers, while Virgin Money is the UK’s sixth largest retail bank with around 6.6 million customers and 91 branches.

Combining the two would create a group with 696 branches, second only in the UK to Lloyds Banking Group.

Nationwide said it would keep a branch in each location where the two businesses are present until at least the start of 2026.

The 220p-a-share price offered by Nationwide is 38% higher than Virgin Money’s closing share price on Wednesday, and the bank says it is “minded to recommend it” to shareholders.

The deal does not need the approval of Nationwide’s mutual members but it does need to be backed by Virgin shareholders.

Last month, Barclays announced it was buying Tesco’s retail banking operations for £600m, and analysts say the sector could see more takeovers.

“With the outlook for the UK economy stabilising, we wouldn’t be surprised to see more deals like this announced,” RBC Capital Markets analyst Benjamin Toms told Reuters.

“UK bank valuations are relatively cheap for the sustainable returns they offer.”

Source: bbc.co.uk

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