BY Richard Summerfield
Nationwide Building Society’s $3.71bn deal to acquire Virgin Money has been unanimously recommended by the directors of both companies. Under the terms of the transaction, each Virgin Money shareholder will receive 220 pence in cash, comprising 218 pence per Virgin Money share and a proposed dividend of 2 pence per share.
The acquisition, which will solidify Nationwide’s position as the UK’s second-largest mortgage lender, will also trigger the resignation of David Duffy, chief executive of Virgin Money, and is likely to lead to job cuts as well as an official ‘review’ of the combined group’s workforce. If approved, the deal would create a combined group with £366bn in total assets, nearly 700 branches and more than 23 million customers.
Nationwide believes that the acquisition will enable it to accelerate its strategy and broaden and deepen its products and services faster than could be achieved on its own.
In a statement Nationwide has also confirmed that its chief financial officer, Chris Rhodes, will become the chief executive of Virgin Money once the acquisition is complete and Mr Duffy steps down. Muir Mathieson, deputy chief financial officer (CFO) and treasurer of Nationwide, will become CFO of Nationwide. Both appointments are subject to regulatory approval and will report directly into Debbie Crosbie, chief executive of Nationwide.
“This acquisition strengthens Nationwide and means we can offer more value and broader services for our current and future members,” said Ms Crosbie. “More people will experience the benefits of mutual ownership and the customer-focused approach of a building society.”
“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,” said Kevin Parry, chairman of Nationwide.
Under the terms of the deal, Virgin Money, which was bought by Clydesdale & Yorkshire Banking Group for £1.7bn in 2018, will pay a £250m exit fee to the Virgin Group to stop using its name in four years' time. The bank will also pay the Virgin Group £15m a year while it continues to do so.
News: Nationwide, Virgin Money directors "unanimously" back $3.7 bln deal