(Alliance News) - The Competition & Markets Authority on Friday said it had opened an inquiry into Nationwide Building Society's acquisition of Virgin Money UK PLC, on the grounds that the move could hurt banking competition in the UK.

In March, Wiltshire-based Nationwide said it had agreed to buy rival lender Virgin Money UK in an all-share deal worth around GBP2.9 billion.

Nationwide offered 220 pence per Virgin Money share, comprising 218p in cash and a 2p dividend.

Nationwide said that the deal would "combine two complementary businesses, creating the second-largest provider of mortgages and savings in the UK" behind Lloyds Banking Group PLC.

Last week, the requisite number of Virgin Money shareholders voted in favour of the scheme, expected to complete in the fourth quarter of 2024 following court sanctioning.

However, the CMA on Friday said it is considering whether the deal could result in a relevant merger situation and, if so, whether this "may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services".

The CMA has informed the two parties of the launch of its merger inquiry, and will pass a phase 1 decision within 40 days of the announcement.

To assist with the assessment, the CMA has invested comments from any interested party.

Shares in Virgin Money were up 0.3% at 213.60 pence each in London on Friday morning.

By Hugh Cameron, Alliance News reporter

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