Virgin In For Northern Rock

A Virgin Group led consortium has today announced its intention to launch a bid for troubled bank Northern Rock in the wake of its share price fall as a result of the strong liquidity shortage experienced over the last few weeks.

The announcement, one of a number of potential takeover deals spoken of over the last couple of weeks, would see the Virgin Group led by Richard Branson, with the backing of investors from across the world, take control over Northern Rock through acquiring a majority share holding.

It is thought that should the deal proceed, Northern Rock will be rebranded ‘Virgin Money’ in keeping with the range of similarly branded companies within the group of the same name. Also joining Virgin in the takeover bid alongisde various individual investors is insurance group AIG.

It is expected that following the takeover Northern Rock will remain in its current form with its present management structure wholly in tact. The only changes would lie in the branding of the organisation and its products, with the exception of its charitable division which will remain the Northern Rock Foundation.

As a result of the announcement shares in Northern Rock were strongly up over the course of the morning despite losing much of their value in the aftermath of its emergency plea for liquidity from the Bank of England.

It remains to be seen whether Virgin will officially make an offer for the company, and indeed whether it will survive in the short term on continued support from the banking authorities. It is thought that any takeover bid would require a substantial capital injection into the bank to repay money owed to the Bank of England and to continue its lending operation.

An announcement is expected early next week, as the Virgin Group is expected to make a move towards viewing and analysing the Northern Rock accounts.

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