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JC Flowers & Olivant re-enter bidding for Northern Rock

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by Kay Mitchell

Private equity group, JC Flowers, and investment group, Olivant, run by Luqman Arnold, the City stalwart and former Abbey chief executive, are to re-enter the bidding from crisis-torn Northern Rock.

JC Flowers, headed by former Goldman Sachs employee Chris Flowers, was thought to be a favourite for a takeover of the struggling bank until Northern Rock bosses announced that Sir Richard Branson’s Virgin proposal in consortium with AIG would be preferred in any takeover approach.

The Olivant offer is not a takeover bid and proposes only that Mr Arnold and his team take a 15% stake, leaving existing shareholders owning the majority.

Originally, JC Flowers intended to give shareholders virtually nothing for their shares and cut them out of the future rescue of the bank. However, it has now revised its proposal and is willing to offer them a continued stake. Furthermore, it is offering to repay £15 billion to the Bank of England, which will make its proposal more appealing to the Government.

Sir Richard Branson’s group, Virgin, was thought to be the preferred suitor last week which would see Northern Rock re-branded as Virgin Money.

Last week, Bryan Sanderson, Northern Rock’s chairman, described the Virgin deal as ‘very good news’ for the bank.

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News posted: December 3, 2007

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