Richard Branson set for $856 million payout from Nationwide's Virgin Money takeover

By Louis Goss

Richard Branson is set to receive a payout worth more than GBP670 million ($856 million), in addition to annual royalties worth GBP15 million a year, following Nationwide's takeover of his U.K. banking business Virgin Money, new disclosures show.

The British billionaire, who started out as music producer before becoming one of the U.K.'s most well-known entrepreneurs, is set to receive GBP421.95 million for his stake in Virgin Money plus GBP250 million in the form of an exit fee that will let Nationwide stop using the Virgin brand.

Nationwide's GBP2.9 billion acquisition of Virgin Money, if it's approved, is set to see the British mutual lender integrate the company into its wider business, in a rebranding that will see the Virgin Money brand disappear.

Virgin Money currently licenses the right to use the Virgin brand from Branson's privately-owned licensing company, Virgin Enterprises, under the terms of a trademark and licensing agreement that includes a GBP250 million exit fee clause.

As such, Nationwide will, under the terms of the TMLA, be required to pay out the GBP250 million exit fee to Branson, who is known for his protective stance over the Virgin brand, which he first created in 1972 after starting his record label Virgin Records.

This exit fee will be paid out in addition to the GBP421.95 million Branson will receive for his 14.55% stake in Virgin Money (UK:VMUK), in alignment with Nationwide's agreement to buy the business at a price of 220 pence per share or GBP2.9 billion for the company as a whole.

In the period following completion of Nationwide's acquisition, Branson will also be paid a further GBP15 million in royalties each year, up until Nationwide stops using the Virgin Money brand.

Branson, who was born in London in 1950, currently has a net worth of around $2 billion following sharp drops in the value of the Virgin empire in recent years, according to Forbes.

Nationwide's plans to stop using the Virgin brand sit in stark contrast to those pursued by Clydesdale and Yorkshire Banking Group, which kept the Virgin Money brand following its acquisition of the Newcastle headquartered challenger bank in 2018.

In its most recent financial accounts for the year ending in December 2022, Branson's Virgin Enterprises generated revenues worth GBP78.53 million, leading to pre-tax profits worth GBP55.6 million, from its business licensing the Virgin brand.

The Virgin brand is used by a variety of companies across the globe, including by airline Virgin Atlantic, railway company Virgin Rail Group, music producer Virgin music, and space travel company Virgin Galactic.

-Louis Goss

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03-21-24 0542ET

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