Sir Richard Branson's Virgin consortium was today confirmed as the preferred bidder for troubled mortgage bank Northern Rock.
Northern Rock will now enter into detailed talks with the Virgin Group-led team, which was chosen from a number of suitors vying for the bank. Northern Rock could be rebranded as Virgin if the offer wins through.
Virgin's deal will see £1.3 billion of funds injected into the group in return for a controlling stake, with plans to pay back £11 billion of the estimated £25 billion Bank of England loan immediately. The consortium did not reveal a takeover price, but it did say it would look to raise funds by offering new shares at a price of 25p each - less than a third of the current value.
Bryan Sanderson, chairman of Northern Rock, said the bid was 'very good news for Northern Rock'. He added: 'I am grateful for the support that we have had from customers and employees who have stayed loyal to us during these difficult times, and pleased that a solution that firmly restores the company's prospects has been identified.'
But this will not resolve all the questions about Northern Rock's future as investors - large and small - may still try to block the deal. Shares rose 36%, or 31p, in early trading to 116.6 pence.