- The deal would create the UK’s second-largest provider of mortgages and savings.
- Nationwide thinks it would be impossible to give its members a voice
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Nationwide members look set to miss a vote on the building society’s £2.9bn takeover of Virgin Money, as the pair made the deal official on Thursday.
A fortnight ago, the two groups agreed a preliminary takeover deal which would create the UK’s second-largest mortgage and savings provider, with more than 25,000 employees and around £366 billion in revenue. assets.
Under the terms of the acquisition, Nationwide will pay Virgin Money shareholders 220 pence per share, a premium of 40 per cent to the latter’s average closing share price in the three months to March 6 .
But the agreement “will not be subject to any conditions relating to the adoption of a resolution by the members of Nationwide”, declared the two men, the board of directors of the mutual having “determined that no approval of this type was not required.
No hurdles: It remains unclear whether Nationwide Building Society members will get a vote on the proposed £2.9 billion takeover of Virgin Money.
Sir Richard Branson, who has a 14.5 per cent stake in Virgin Money, could receive £400 million while the lender’s chief executive, David Duffy, is set to receive £3.5 million.
Virgin Money will also retain its brand and operate as a separate legal entity, with its own board of directors and banking license, before being fully integrated into Nationwide’s business by around 2030.
The deal requires approval from 75 percent of Virgin Money shareholders, who have secured 14.7 percent so far.
However, the building society is under pressure to give voting rights to its members, with financial services expert Baroness Bowles and former pensions minister Baroness Altmann urging Nationwide to do so.
“The whole beauty of a mutual is that it is managed in the interest of its members who also have the right to vote, and giving them the opportunity to exercise their right in the context of a major transaction seems reasonable” , Altmann said recently.
Nationwide believes it would be impossible to allow its large membership base to have their say in a short space of time and that a vote is not legally necessary under the Building Societies Act 1986.
It said: “Having taken appropriate legal and financial advice, the Nationwide board has determined that no such approval is required.
“Accordingly, the acquisition will not be subject to any conditions relating to the passing of a resolution by the members of Nationwide to approve the acquisition.”
Nationwide believes that purchasing the company will expand its products and services “more quickly than could be achieved organically.”
The Swindon-based group, founded 140 years ago and the world’s largest building society, will make its first move into the merchant banking sector with the takeover.
Its chief executive, Debbie Crosbie, said the deal “strengthens Nationwide and means we can offer more value and broader services to our current and future members.
“More people will benefit from the benefits of mutual ownership and the customer-focused approach of a building society.”