Nationwide members look set to miss out on a vote over the building society’s £2.9billion Virgin Money takeover, as the pair formalised the deal on Thursday.
A fortnight ago, the two groups struck a preliminary takeover agreement that would create the UK’s second-biggest mortgages and savings provider, with over 25,000 employees and about £366billion in assets.
Under the terms of the acquisition, Nationwide will pay Virgin Money’s shareholders 220 pence per share, a 40 per cent premium on the latter’s average closing share price in the three months to 6 March.
But the deal ‘will not be subject to any condition relating to the passing of a resolution by Nationwide’s members’, the pair said, with the mutual’s board having ‘determined that no such member approval is required’.
No hurdle: It remains uncertain whether Nationwide Building Society’s members will get a vote on the proposed £2.9billion takeover of Virgin Money
Sir Richard Branson, who owns a 14.5 per cent stake in Virgin Money, could receive £400million while the lender’s chief executive, David Duffy, is in line for a £3.5million payout.
Virgin Money will also retain its brand name and operate as a separate legal entity, with its own board and banking licence, before being completely integrated into the Nationwide business by about 2030.
The deal requires approval from 75 per cent of Virgin Money’s shareholders, having secured 14.7 per cent so far.
However, the building society is under pressure to give its members a vote, 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 run in the interests of its members who have voting rights too, and giving them the chance to exercise their right in a major transaction seems sensible,’ Altmann recently said.
Nationwide thinks it would be impossible to allow its vast membership base a say within a short time period and that a vote is not legally needed under the 1986 Building Societies Act.
It said: ‘Having taken appropriate legal and financial advice, the Nationwide board has determined that no such member approval is required.
‘Accordingly, the acquisition will not be subject to any condition relating to the passing of a resolution by Nationwide’s members to approve the acquisition.’
Nationwide believes that buying the firm will expand its products and services ‘faster 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 business banking with the takeover.
Its chief executive, Debbie Crosbie, said the deal ‘strengthens Nationwide and means we can offer more value and broader services for our current and future members.
‘More people will experience the benefits of mutual ownership and the customer-focused approach of a building society.’
