“We want more,” demands KBW. Analysts at the Stifel subsidiary were referring to Nationwide’s 218p (plus a 2p divi) per share surprise cash offer for Virgin Money at a £2.8 billion valuation.
“We believe that this offer is inadequate for what is the leading quoted UK challenger bank,” analysts said of the offer that was first lodged in March.
KBW acknowledged the enticing 38% premium to Virgin Money’s valuation at the time of advancing the offer, but added that it’s only an 11% premium to analysts’ pre-bid consensus target price.
Nationwide may struggle to get the deal over the finishing line regardless, amid a growing shareholder revolt against the merger.
Analysts at KBW suggested a 250p per share valuation on Virgin Money’s stock is not unreasonable
“We believe that the current offer fails to reflect the unique opportunity offered by VMUK, and believe that the strategic and financial logic of the transaction applies to a number of other potential acquirers within our coverage,” they said, singling out Barclays.
“With that in mind we would recommend VMUK shareholders vote against the current offer at the general meeting, due at some point after April,” said KBW.