Nationwide Constructing Society has agreed phrases for a takeover of Virgin Cash in a £2.9bn deal that will create a bigger rival to the UK’s main lenders.
Whereas nothing has been finalised, the supply on the desk would see the 2 manufacturers proceed to be run as separate entities, with the Virgin Cash model retained for round six years.
No materials modifications to the dimensions of Virgin Cash’s 7,300-strong workforce have been anticipated “within the close to time period”, Nationwide mentioned.
The all-cash supply of 220p per Virgin Cash share represented a premium of 38% to Virgin Cash’s share worth on Wednesday.
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A deliberate 2p a share dividend payout would come on prime of that fee, a press release by the pair added.
The expanded firm would develop into the nation’s second largest mortgage and financial savings group by market share, ought to a takeover proceed.
It could be value round £366.3bn, with complete lending and advances of about £283.5bn.
Nationwide boss Debbie Crosbie says its future stays as member-owned. Pic: Nationwide
The mutual mentioned the deal could be funded by way of its present money assets and permit it to supply a wider vary of services to its members.
Nationwide chief govt Debbie Crosbie mentioned: “Importantly, Nationwide will stay a constructing society, and a mixed group would convey the advantages of fairer banking and mutual possession to extra individuals within the UK, together with our persevering with dedication to retain present branches, as a part of our ‘Department Promise’ and main ranges of customer support.
“We imagine the mixture would create a stronger and extra numerous enterprise that will likely be higher positioned to ship worth to our members and clients, each now and sooner or later.”
Virgin Cash UK’s chairman, David Bennett, added: “The board of Virgin Cash is happy that Nationwide recognises the appreciable strengths and alternatives that exist throughout our enterprise, with the potential acquisition delivering enticing worth for our shareholders.
“We’re assured {that a} mixture would help an thrilling new chapter for Virgin Cash to learn from Nationwide’s scale and ambition.”
Virgin Cash shares rose 36% on the market open, reflecting the size of the supply.
The financial institution was previously the Clydesdale and Yorkshire financial institution group and rebranded after a £1.6bn takeover of Sir Richard Branson’s banking group in 2018.
Susannah Streeter, head of cash and markets at Hargreaves Lansdown, mentioned of the announcement: “The £2.9bn deal got here as a shock however given the constructing society’s strategic goal it is is sensible.
“It desires to bolster and diversify streams of funding, faucet into enterprise deposits, and provides a rocket increase to the event of its companies.
“A mutual taking on a listed financial institution is a uncommon transfer, however Nationwide clearly doesn’t need to be caught prior to now and needs the know-how and entry to scoop up future clients who demand extra cutting-edge monetary companies.”
