(Bloomberg) -- Nationwide Building Society’s £2.9 billion ($3.8 billion) deal to buy Virgin Money UK Plc was given the all-clear by the UK’s antitrust regulator, paving the way to create Britain’s second largest provider of home loans.
The Competition and Markets Authority said Friday the deal wouldn’t cause a substantial reduction in competition and closed its investigations. It said it looked at the bank’s mortgages and credit card segments and engaged with the Financial Conduct Authority on the probe.
The transaction combines the UK’s sixth-largest retail bank by total assets and its biggest building society — making it second only to Lloyds Banking Group Plc in terms of home provision of loans.
It would bring Virgin’s 6.6 million customers, business lending arm and an estimated 8.6% market share in UK credit cards to Nationwide’s existing mortgages, savings and current account offerings.
“We remain on course to receive all the necessary approvals to complete the deal in the final three months of this year,” said Debbie Crosbie, chief executive officer of Nationwide.
Shares in Virgin Money have rallied 35% to 215 pence apiece since the acquisition offer of 220 pence per share was announced on March 7.
Under the terms of the agreement announced announced in March, shareholders of Virgin Money are set to receive 220 per share from Nationwide, with 218 pence in cash and 2 pence in proposed dividend.
As part of its probe, the CMA said that the tie-up would compete effectively with competitors including Lloyds, Barclays Plc, NatWest Group Plc and HSBC Holdings Plc. Before the deal, Virgin Money was struggling to compete with the “big four” banks that dominate accounts and mortgages.
“The enlarged group will combine two complementary businesses that together can offer more great products and services to a larger customer base,” Virgin Money said.
--With assistance from Sam Nagarajan.
(Updates with a comment for Nationwide in the fifth paragraph)
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