April 11, 2024 | Financials | Europe | Active

Virgin Money / Nationwide Building Society: Deal Insight

Two weeks after publicly announcing a preliminary agreement, on 21-Mar-24, Nationwide Building Society (“Nationwide”), the UK's third-largest mortgage provider, signed a firm agreement to acquire Virgin Money UK (“Virgin Money”), a full-service digital bank. The offer of 220p per share in cash, which includes a 2p per share dividend to be paid “shortly prior to completion”, values Virgin Money at £2.9bn. It equates to a 38.3% takeover premium over Virgin Money’s undisturbed price on 6-Mar-24, before the companies disclosed a potential deal. Nationwide intends to finance the acquisition with its existing cash resources, and its financial advisor, UBS, has confirmed funding availability. The deal is structured as a UK court-sanctioned scheme of arrangement and requires approvals from Virgin Money shareholders at an EGM (75% of votes) and a Court Meeting (75% of shares). Target directors unanimously recommend that shareholders vote in favour, and directors holding 0.2% have offered irrevocable undertakings to vote in favour. Further, Sir Richard Branson-controlled private entities, Virgin Group and Vieco Investments, have offered irrevocable undertakings regarding 14.6% of Virgin Money shares. In total, irrevocables have been received for 14.7%. The deal is not conditional on any resolutions from Nationwide members, but it requires approvals from the Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA), and the Competition and Markets Authority (CMA). The companies expect the scheme document to be published by 30-Apr-24 and for effectiveness to take place during 4Q’24; the long stop date is 31-Jan-25. Ahead of publishing the scheme document, Virgin Money will approach a High Court judge, on 19-Apr-24, to determine if all Virgin Money shareholders, including Virgin Group and Vieco Investments, can vote together as a single class at the court meeting. The target believes that all Virgin Money shareholders should vote as a single class, but due to its arrangements with Virgin Enterprises and Virgin Red (discussed below), it could be argued that the Branson-led entities should ...

How to Access this Report

Please contact us to request access to this report.


Share this article


Back to top of page