Nationwide has confirmed its £2.9bn cash offer for Virgin Money, which will create the second-largest mortgage provider in the UK.  

The recommended deal will see the mutual offer the bank’s shareholders 218p in cash and a 2p dividend to be paid in this financial year, or, if earlier, shortly before the completion of the takeover.  

The deal is a 38% premium to Virgin Money’s 159.1p closing price of pence on 6 March, the day before the deal was announced.  

Nationwide plans to terminate the Virgin brand after four years and will rebrand the bank over the following two years.  

The mutual has also extended its branch promise by another two years “so that everywhere it has a branch, it promises to still be there until at least the start of 2028.  

“Should Nationwide be successful in buying Virgin Money, the Promise will also apply to Virgin Money branches, following the completion of any existing Virgin Money branch closure plans”.  

The mutual says the “acquisition will enable Nationwide to accelerate its strategy and broaden and deepen its products and services faster than could be achieved organically, whilst providing a return that will further support Nationwide’s financial strength and deliver greater value to its customers and members”.  

AJ Bell investment director Russ Mould points out: “Nationwide’s bid interest in Virgin Money is now a recommended offer, with shareholders getting 220p cash per share.   

“After the miserable performance of Virgin Money on the market, shareholders might welcome the chance to get out at a small premium.  

“You can never rule out someone else throwing their hat into the ring, but Nationwide is looking fairly comfortable for now with getting its offer over the line.” 

Nationwide chief executive Debbie Crosbie says: “This acquisition strengthens Nationwide and means we can offer more value and broader services for our current and future members.”  

Nationwide chairman Kevin Parry adds: “Following full consideration and the appropriate due diligence, and after taking comments from members into account, the Board of Nationwide’s assessment is that the binding offer to acquire Virgin Money is in the best interests of the Society and its present and future members.”  

The deal will put Nationwide behind Lloyds Banking Group, which owns Halifax, as the largest mortgage business in the UK.