31 May 2024 , 09:10
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The UK's competition authority is set to scrutinise the massive £2.9 billion acquisition of Virgin Money by Nationwide.
On Friday morning, the Competition and Markets Authority (CMA) announced it has initiated a merger inquiry into the deal. They've called on stakeholders to submit their opinions on the transaction, with a deadline of June 14 for input.
The CMA is deliberating whether the merger the most significant in the UK banking sector since the financial crisis might "result in a substantial lessening of competition" within the British market. By July 26, the CMA will determine if the deal warrants an in-depth phase 1 investigation.
Back in March, Nationwide and Virgin Money agreed on terms for the takeover. Nationwide made its move with a 220p-a-share bid for Virgin Money, which also includes a proposed 2p-per-share dividend. Just last week, an overwhelming 89% of Virgin Money shareholders gave the green light to the deal, smoothing the way for its finalisation.
Upon completion, which is anticipated in the last quarter of 2024, Virgin Money's CEO David Duffy will step down, and Nationwide's Debbie Crosbie will take the reins of the combined entity. This ambitious merger will unite the UK's fifth and sixth biggest retail banks, forming a powerhouse with about 24.5 million customers, over 25,000 employees, and close to 700 branches.
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However, this move would mark the end of the Virgin Money brand, as Nationwide intends to rebrand the Virgin Money business under its own name within six years, despite initially maintaining both brands.