Olivant pulls out of bid for Northern Rock
Feb 5 2008 by Sue Scott, Evening Gazette
ONE OF the front runners in the bidding for Northern Rock pulled out yesterday, leaving the field open to a consortium led by Richard Branson's Virgin group and the Rock's own management team.
The 11th hour decision by private equity group Olivant, led by former Abbey National chief Luqman Arnold, which was widely tipped as the shareholders’ favourite, was said to have confounded the Treasury. Olivant blamed inflexible terms in the government’s refinancing package for the turnaround.
The latest twist in the six-month saga of the Rock brings the spectre of nationalisation closer, as time runs out for Chancellor Alistair Darling to find a solution to the one issue that has dogged his time in office.
Despite earlier hopes that others may enter the race, no new potential white knight came forward with a plan for the bank as the deadline for bids closed.
The news sent Rock’s shares plummeting 8%.
Virgin, meanwhile, said its consortium offered a “sound” solution for the troubled Newcastle lender.
It aims to inject £1.25bn of new equity into Northern Rock, which it intends to rebrand as Virgin Bank, with £500m being raised through offering shareholders new shares at 25p each. It did not disclose details of the impact on Northern Rock’s 6,500-strong workforce.
It is thought that shareholders were unhappy with its initial bid plans to take a stake of up to 55% and Virgin had reportedly been planning to cut this to 45% in the final bid.
