Virgin Group may bid for Northern Rock

The latest bidder reported to making a move on crisis-torn Northern Rock is Virgin Group, owned by Sir Richard Branson. The airline, media and gyms group is looking to take a controlling stake in the bank with the backing of investors in the US and the Middle East.

It is thought that Virgin has already met the Newcastle-based bank’s management and is presently in discussions with potential investors. An association would see Northern Rock’s business merged with Virgin Money operations which already offers mortgages and other financial services.

Virgin is one of many eyeing up Northern Rock, private-equity groups, JC Flowers, Cerberus, Blackstone and Apollo expressed interest in the bank last week. Furthermore, hedge fund Jon Wood has taken a stake in the bank to more than 4% this week.

It is believed that Virgin is putting a finance package together that could include the loan from Citi and would seek to take control of the group through the issuing of new shares.

Northern Rock recently sought emergency funding from the Bank of England after it was faced with increasing borrowing costs amid tighter credit markets after the collapse of the sub-prime mortgage market in America.

Discuss this in the Finance Markets forums

Story link: Virgin Group may bid for Northern Rock