Competition watchdog launches Nationwide-Virgin Money £2.9bn merger probe
The Competition and Markets Authority has launched an investigation into the £2.9bn merger of Nationwide with Virgin Money, with the outcome in late July.
The watchdog told markets this morning that the merger notice met criteria laid out in the enterprise act.
It said the investigation’s work will start on the next working day, 3 June, and the deadline for whether to escalate it to phase two would be 26 July. The investigation is understood to be fairly standard procedure for a merger of this nature.
This comes after the board of Virgin Money accepted a £2.9bn takeover offer from Nationwide to create the UK’s second-largest provider of mortgages and savings.
The takeover, which Virgin Money agreed to on a preliminary basis, would create a combined group with 700 branches – second only to Lloyds Banking Group, with the combined groups assets of roughly £366.3bn
Virgin Money is the UK’s sixth-largest high street bank, while Nationwide is Britain’s biggest building society.
When the move was announced in March, it was also stated that Virgin Money chief executive David Duffy will step down, succeeded by Nationwide CFO Chris Rhodes.
The acquisition is expected to conclude in the fourth quarter of 2024.
The merger has however faced mounting opposition from both members and analysts ahead of a shareholder vote.
Nationwide offered a total of 220p per Virgin Money share, including a 2p final dividend. Analysts at Stifel-owned KBW said in a note that it was not enough.
When first announced, Shore Capital analyst Gary Greenwood also pointed out that it marked a 35 per cent discount to Virgin Money’s book value, adding: “We feel it undervalues the group and that management could have perhaps driven a harder bargain.”
Virgin Money shareholders approved it despite warnings.