By Lars Mucklejohn
Sir Richard Branson is set to receive upwards of £650m from a potential takeover of his challenger bank Virgin Money by Nationwide, it has been estimated.
The two lenders announced last week that Nationwide had agreed terms for a £2.9bn takeover of Virgin Money to create the UK’s second largest provider of mortgages and savings, with shareholders set to receive 220p per Virgin Money share.
Branson stands to receive an “exit fee” of at least £250m from Nationwide on top of the £400m valuation of his 14.5 per cent stake in Virgin Money under the preliminary agreement.
The billionaire, who coined the Virgin name in 1972, has struck a “brand licence agreement” with Nationwide as part of the negotiations, under which the building society would stop using the Virgin Money name after four years.
The Virgin name is central to Branson’s business empire and licenced via Virgin Enterprises. It is has been used across dozens of brands ranging from broadband and airlines to entertainment and leisure.
The Sunday Times reported that Branson would receive an estimated £60m in fees each year the brand is used by Nationwide and then at least £250m when the deal terminates.
The newspaper’s estimates were based on a formula used when CYBG, the owner of Clydesdale and Yorkshire Bank, adopted the Virgin Money brand after buying the bank in 2018.
The number remains a speculation as any takeover by Nationwide has yet to be formalised. Nationwide has until 4 April to announce a firm intention on whether or not to make an offer for Virgin Money.
A rival bidder for the challenger bank is considered unlikely, with its shares nearing Nationwide’s 220p offer on Thursday.
Virgin Money, the Virgin Group and Nationwide did not comment when approached by City A.M.
