Virgin In With Improved Rock Offer

The Virgin Group has been linked with an improved offer for troubled mortgage lender Northern Rock over the course of the weekend amidst growing speculation over the future of the bank which could still see a commercial resolution before the need to move to nationalisation.

Sir Richard Branson’s group has been linked with a potential takeover of Northern Rock for some time, as have a number of private equity groups and investment consortiums. However it had looked likely, until now, that the government may seek to nationalise the bank for fears of a lack of finance to support any commercial takeover in the wake of the credit crunch.

The revised Virgin offer is set to initially reduce its equity stake in the bank to 45% from 54%, with a view to giving more say to the current shareholders in the running of the organisation on the road to recovery. It is thought that this may appear to be a more attractive bid for both parties, and will minimise the problems of raising the extra 9% equity finance.

Whilst there has been much speculation over the future of the Rock, Prime Minister Gordon Brown has suggested that there are still a number of bids on the table, and a number of possible avenues for Northern Rock to take without committing to the bid from the Virgin Group.

The Virgin bid would see Northern Rock rebranded as Virgin Money, and would also see several other firms including AIG take a stake in the bank with a view to improving performance and bringing stability back to the sub-prime hit bank.

Meanwhile private equity group Olivant are also thought to have a chance of acquiring the Rock, depending on the funding package proposed by the government over the next few days.

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