Nationwide set to take over Virgin Money in £2.9bn deal

Nationwide Building Society is set to take over smaller rival Virgin Money after the pair agreed a deal worth around £2.9 billion.

Nationwide has made a 220p-a-share firm offer for Virgin Money, including a planned 2p-per-share dividend payout, which will now be voted on by Virgin Money shareholders.

Confirmation of the deal comes after the two companies reached a preliminary agreement earlier this month, with Nationwide having spent the past two weeks looking through Virgin Money’s books before making the firm offer.

Nationwide said: “Nationwide’s board agreed that a binding offer to acquire Virgin Money was in the best interests of the society and its present and future members, following full consideration and the appropriate due diligence, and after taking comments from members into account.”

The planned takeover will bring together Britain’s fifth and sixth largest retail lenders, creating a combined group with around 24.5 million customers, more than 25,000 staff and nearly 700 branches.

But the move will spell the end of the Virgin Money brand, with Nationwide planning to rebrand the Virgin Money business as Nationwide within six years, although it will keep the two brands initially.

Nationwide said it will keep a branch in each location where the combined group is present, until at least the start of 2028 – announcing that it has extended its branch promise by another two years.

Nationwide said it does not intend to make any “material changes” to the size of Virgin Money’s 7,300-strong workforce within the first year, but it is assessing the employee needs of the combined group and expects there to be some “limited” impact on back office staff.

“There may be some limited workforce changes to reduce the size of overlapping central functions relating to Virgin Money ceasing to be a standalone publicly listed company,” the groups said.

Nationwide also stressed it will remain a mutual building society if the deal goes ahead and is given the green light by Virgin Money’s shareholders.

The society said it will not need to put the deal to a vote of its members, “having taken appropriate legal and financial advice”.

Nationwide chief executive Debbie Crosbie said: “This acquisition strengthens Nationwide and means we can offer more value and broader services for our current and future members.

“More people will experience the benefits of mutual ownership and the customer-focused approach of a building society.”

Virgin Money chief executive David Duffy said: “The proposed combination with Nationwide presents an exciting opportunity to build on Virgin Money’s significant strategic and operational progress, including the consistent growth in our retail and business customers, deposits and target lending.”