Sir Richard Branson’s Virgin consortium was today confirmed as the preferred bidder for troubled mortgage bank Northern Rock.
Northern Rock will now enter into detailed talks with the Virgin Group-led team, which was chosen from a number of suitors competing to buy the bank.
Northern Rock could be rebranded as Virgin if the offer wins through.
Virgin’s deal will see £1.3 bn of funds injected into the group in return for a controlling stake – with plans to pay back £11bn of the estimated £25bn Bank of England loan immediately.
The consortium is offering investors 25p for each share, which values Northern Rock at around £105.3 m – less than a third of the lender’s market value.
Bryan Sanderson, chairman of Northern Rock, said the bid was “very good news for Northern Rock”.
He added: “I am grateful for the support that we have had from customers and employees who have stayed loyal to us during these difficult times, and pleased that a solution that firmly restores the company’s prospects has been identified.”
The Treasury is understood to be getting impatient with the sales process and wants the issue resolved before Christmas.
The bank and the Government are likely to insist that the alternative to Virgin’s bid would be for the bank to go into administration, leaving investors with nothing.
About 100,000 Northern Rock small shareholders wrote to the bank’s chairman, Bryan Sanderson at the weekend expressing concerns that directors were planning a “fire sale” of assets.
