In M&A news on UK stocks, shares of Virgin Money UK (GB:VMUK) surged after the company agreed to an acquisition offer from Nationwide Building Society (GB:NBS). Both companies have signed a preliminary agreement for an all-cash deal valued at £2.9 billion. The proposed acquisition would form a combined group with total assets of around £366.3 billion, positioning it as the UK’s second-largest provider of mortgages and savings.
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Virgin Money’s stock surged by a substantial 36% following the announcement of this news, and NBS stock was trading up by 0.14% at the time of writing today.
Nationwide Building is among the largest building societies in the world, offering retail financial services. Meanwhile, Virgin Money is a financial services brand operating under the Virgin Group.
Details About the Acquisition
As part of the agreement, Virgin Money shareholders will receive a total of 220p per share, including a proposed dividend of 2p per share. The offer price of 220p represents a 38% premium over Virgin’s closing share price on Wednesday.
With this acquisition, which is subject to standard due diligence procedures, Nationwide aims to enhance the scope and depth of its products and services at a faster pace than organic growth.
Meanwhile, Virgin Money will maintain its operations as a distinct entity within Nationwide. However, over the next six years, it would gradually be assimilated into Nationwide, leading to the eventual retirement of the Virgin Money brand. Virgin Money’s board has extensively reviewed the deal and is inclined towards recommending it to shareholders.
Are Virgin Money Shares a Good Buy?
On TipRanks, VMUK stock has been assigned a Moderate Buy rating based on two Buy and two Hold recommendations. The Virgin Money share price target is 198.0p, which is 8.5% below the current trading level.
It’s worth mentioning that these ratings were assigned before the announcement and may be subject to change.
