In a landmark deal valued at £2.9 billion, Nationwide Building Society is poised to acquire Virgin Money, propelling it to become the UK’s second-largest mortgage lender and significantly expanding its customer base to 24.5 million. The merger, expected to be finalized by the end of 2024, signals a major shift in the UK banking landscape, merging Nationwide’s mutual ownership model with Virgin Money’s innovative banking solutions.
Nationwide Building Society has announced a substantial £2.9 billion acquisition of Virgin Money, a move which propels Nationwide to the status of the UK’s second-largest mortgage lender and one of its largest retail banks, with a combined customer base of 24.5 million. The agreement sees the merger of two prominent financial institutions, with the transaction expected to be finalized by the end of 2024.
As part of the takeover deal, Virgin Money shareholders are to vote on the proposed offer, which is set at 220p per share, including a dividend payout. This acquisition leads to a significant leadership change, with Virgin Money’s CEO, David Duffy, stepping down and Nationwide’s finance chief, Chris Rhodes, overseeing the transition. Nationwide’s CEO, Debbie Crosbie, will lead the newly combined entity.
The merger includes a notable £310 million payment for the use of the Virgin Money brand, which Nationwide intends to phase out within six years, eventually rebranding Virgin Money’s operations under its own name. This consolidation will expand Nationwide’s services, incorporating business banking and integrating the historical business of Northern Rock.
Despite concerns over job security for Virgin Money’s 7,300 employees, Nationwide has committed to minimal workforce changes in the first year post-merger. However, it acknowledges that some adjustments will be inevitable due to overlapping roles within the merging entities.
Sir Richard Branson, Virgin Money’s primary shareholder, expressed support for the deal, which promises a significant financial return, including for Virgin Money’s executives. This merger is poised to significantly alter the landscape of the UK’s banking sector, combining Nationwide’s emphasis on mutual ownership and customer-focused services with Virgin Money’s strategic resources.
The acquisition still requires the approval of Virgin Money shareholders, with Virgin Money’s board unanimously recommending its shareholders to support the deal. Nationwide has faced criticism for not allowing its members to vote on the acquisition, pointing to a significant moment in UK banking as these institutions come together.