Nationwide Building Society Receives Regulatory Approval for Virgin Money Acquisition
VUK (VUK) Share Update September 2024 Friday 6th
Nationwide's Acquisition of Virgin Money Receives Regulatory Approval
Nationwide Building Society has received the final regulatory approvals necessary to complete its acquisition of Virgin Money UK PLC, marking a significant milestone in the financial sector.
Instant Summary:
- FCA and PRA have given requisite consent for the acquisition.
- Acquisition to be implemented by a scheme of arrangement.
- Virgin Money shareholders approved the acquisition on 22 May 2024.
- Court hearing to sanction the scheme expected on 27 September 2024.
- Effective date of the scheme is expected to be 1 October 2024.
- No immediate changes to the capital structure of Virgin Money Group.
- Muir Mathieson appointed as CFO of Nationwide.
Regulatory Approvals and Timetable
The boards of Virgin Money and Nationwide are pleased to announce that the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have given their requisite consent to the recommended cash acquisition of the entire issued and to be issued share capital of Virgin Money by Nationwide. The terms of the acquisition were initially announced on 21 March 2024.
The acquisition will be implemented by means of a scheme of arrangement between Virgin Money and its shareholders under Part 26 of the Companies Act. This scheme was approved by Virgin Money shareholders at the meetings held on 22 May 2024. The acquisition is subject to the conditions set out in the scheme document, including the receipt of relevant approvals from the FCA and PRA.
Next Steps
With all relevant regulatory approvals now received, Virgin Money will proceed to seek the sanction of the scheme by the Court in accordance with the timetable. The Court hearing is expected to take place on 27 September 2024, with the scheme becoming effective on 1 October 2024, subject to the Court's sanction and delivery of the Court Order to the Registrar of Companies.
Capital Structure and Leadership Changes
The acquisition will not require any immediate changes to the capital structure of the Virgin Money Group or the combined group as a whole. The PRA has confirmed that it intends to apply sub-consolidated prudential requirements to Virgin Money until 31 December 2028. This means that the outstanding externally held own funds issued by Virgin Money will be eligible to meet the consolidated capital requirements applicable to the combined group.
Additionally, Nationwide has announced the appointment of Muir Mathieson as Chief Financial Officer and executive director of Nationwide, effective immediately. Chris Rhodes will stand down from the Nationwide board and prepare to become the Chief Executive Officer of Virgin Money upon the scheme's effective date.
The acquisition of Virgin Money by Nationwide is expected to have a positive impact on the financial sector. The regulatory approvals signify confidence in the stability and future prospects of the combined entity. This move could enhance Nationwide's market position and provide new growth opportunities. Investors might see this as a strategic consolidation that could lead to increased efficiencies and a stronger competitive stance in the market.
Investor Reaction:
Analysts are likely to react positively to the news, given the regulatory approvals and the strategic benefits of the acquisition. The market may view this as a consolidation that strengthens Nationwide's position in the financial sector. However, some investors might be cautious, awaiting the final Court sanction and the actual integration process of the two entities.
Conclusion:
Investors should keep an eye on the upcoming Court hearing on 27 September 2024 and the scheme's effective date on 1 October 2024. The successful completion of this acquisition could present significant opportunities for Nationwide and Virgin Money shareholders. Staying informed about the integration process and any strategic changes will be crucial for making informed investment decisions.