Nationwide Building Society has had an all-cash bid for Virgin Money accepted.
The move that will make Nationwide the UK’s second-largest mortgage provider, leapfrogging Natwest. Nationwide will pay 220p per share comprising 218p per share cash plus a 2p dividend in a deal that values Virgin at £2.9 billion, a 38% premium to Wednesday’s close.
Virgin Money added it had also suspended plans for a £150 million buyback after the offer, which is pitched at a 37% premium to last night’s share price. The combined group will have total assets of around £366.3 billion and total lending and advances of £283.5bn, the mutual says in a statement to the stock exchange.
In a statement the mutual said “The potential acquisition would enable Nationwide to increase its scale in its core lending and deposit markets and strengthen Nationwide’s position as one of the UK’s leading providers of mortgages, savings and current accounts.
“Virgin Money has a strong unsecured lending business, with £6.7 billion of balances, including an estimated 8.6% market share of UK credit cards, which the Nationwide board believes would complement Nationwide’s existing product offering and unsecured lending.”
Nationwide Building Society Chief Executive Debbie Crosbie said “Importantly, Nationwide will remain a building society, and a combined group would bring the benefits of fairer banking and mutual ownership to more people in the UK.
“We believe the combination would create a stronger and more diverse business that will be better placed to deliver value to our members and customers, both now and in the future.”
Virgin Money Chief Executive David Duffy said “The combined scale and strength would expand our customer offering and complete our journey in the banking sector as a national competitor.”