By Sinead Cruise
LONDON (Reuters) -Directors at Nationwide Building Society (LON:NBS) and takeover target Virgin Money (LON:VMUK) said on Thursday they would "unanimously" recommend the proposed 2.9 billion pound ($3.71 billion) deal to independent Virgin Money shareholders.
Under the terms of the deal, each Virgin Money shareholderwill receive 220 pence in cash, comprising 218 pence per Virgin Money share and a proposed dividend of 2 pence per share.
The total value represents a 38% premium to Virgin Money's closing price on March 6.
"The boards of Nationwide and Virgin Money believe that the acquisition will combine two complementary businesses, creating the second largest provider of mortgages and savings in the UK," the companies said in a statement.
Nationwide is the UK's third largest mortgage provider and holds almost 1 in every 10 pounds saved in the UK, as well as one in 10 of the UK’s current accounts.
Nationwide also confirmed that its Chief Financial Officer, Chris Rhodes, will become the CEO of Virgin Money after the acquisition completes and current Virgin Money CEO David Duffy retires.
Muir Mathieson, Nationwide's Deputy CFO and Treasurer, will become CFO of Nationwide.
Both appointments are subject to regulatory approval and will report directly into Nationwide CEO Debbie Crosbie.
"This acquisition 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," Crosbie said in a statement.
Nationwide also said it would extend its promise to retain all branches in its network until at least the start of 2028, including all Virgin Money branches not already earmarked for closure.
($1 = 0.7814 pounds)