VIRGIN MONEY has agreed to a takeover by Nationwide Building Society in a £2.9 billion deal, the companies have announced.
Nationwide said the merger would enable the company to provide a wider range of products and services to members and boost their financial strength.
The details have not yet been finalised but the deal would allow the two brands to run as separate entities, with the Virgin Money brand retail for six years.
Nationwide was presented with an all-cash offer of 220p per Virgin Money share last Wednesday which represented a premium of 30% to Virgin Money's share price.
The companies added a planned 2p share dividend payout would come on top of the original payout.
Both parties have confirmed the deal was mutual and will be funded through its existing cash resources.
This should allow them to offer a wide range of products and services to its existing members.
Nationwide said it does not intend to make any material changes to the size of Virgin Money’s workforce “in the near term”.
Virgin Money employs around 7,300 people.
Combined the group would have total assets of £366bn and become the second-largest mortgage lender savings group by market share in the UK.
The companies would have an estimated lending and advances of around £283.5bn.
Nationwide chief executive Debbie Crosbie said: "Importantly, Nationwide will remain a building society, and a combined group would bring the benefits of fairer banking and mutual ownership to more people in the UK, including our continuing commitment to retain existing branches, as part of our 'Branch Promise' and leading levels of customer service.
"We believe the combination would create a stronger and more diverse business that will be better placed to deliver value to our members and customers, both now and in the future."
Virgin Money UK's chairman, David Bennett, added: "The board of Virgin Money is pleased that Nationwide recognises the considerable strengths and opportunities that exist across our business, with the potential acquisition delivering attractive value for our shareholders.
"We are confident that a combination would support an exciting new chapter for Virgin Money to benefit from Nationwide's scale and ambition."
Just last month we saw a similar deal made between Barclays and Tesco Bank.
Tesco Bank which has over five million customers was sold to Barclays in an agreed deal that would include acquiring almost 3,000 staff.