Investment bank Goldman Sachs has been called in to come up with a finance package that would allow a private sector bidder to take over Northern Rock. There are now two rival bidders for the high street bank, one is led by Sir Richard Branson’s Virgin Group and the other by investment company Olivant.
Could this emblem be on Newcastle United shirts next season – maybe
But both bidders seem to be struggling to raise the finance needed to buy out the high-street bank.
Because of these difficulties Goldman Sachs – the Government’s advisers in the sale – have been asked to assemble backers and stave off the need for the Treasury to nationalize Northern Rock. Reports today suggest that Goldman Sachs has been given until mid-January to come up with a solution.
Virgin’s consortium was named as Northern Rock’s preferred bidder three weeks ago, but Olivant’s plans seem to be more popular with the shareholders. We know if Virgin wins the deal they will change the name to Virgin Bank, but we currently have no information on Olivant’s plans, which may be to keep the bank’s name unchanged. But with their recent troubles, it would probably be best to change the name of the bank, once any takeover is finalized.
The Virgin team would pump Â£1.3B into the ailing business in return for a 55% stake. On the other hand Olivant would not make a formal offer for the group, but take up a minority stake and bring in a heavyweight management team to quickly turn around the company’s fortunes.
Adam Applegarth, who oversaw the aggressive growth of the bank to become the UK’s fifth-biggest mortgage lender, stepped down as chief executive a week ago today.
So we’ll just have to wait and see if the sponsor for Newcastle United next season will have a different name, which will then be on our shirts. We’ll keep you updated on negotiations as they occur.