Branson waives £100M he stood to receive from Nationwide for use of Virgin Money brand

Richard Branson has foregone more than £100 million he stood to receive from Nationwide for the right to use the Virgin Money brand

Sir Richard Branson has agreed to waive more than £100 million that he was entitled to receive from Nationwide Building Society for the use of the Virgin Money brand in its £2.9 billion acquisition of the bank.

Known for his strict licensing agreements granting companies the right to use the Virgin name across various industries, Branson has already secured a £250 million “exit fee” to allow Nationwide to discontinue the Virgin brand six years after the deal’s completion. However, undisclosed sources indicate that Branson could have received an additional substantial payout covering royalties for up to 40 years, potentially amounting to another £100 million, based on a complex formula outlined in a brand license agreement from 2018.

While Branson’s decision to forego the extra payment may prompt speculation about Nationwide’s negotiating tactics, he stands to benefit financially nonetheless. It is anticipated that Branson will receive approximately £700 million from Nationwide’s delisting from the stock market, including the £250 million exit fee, £60 million over four years for the continued use of the brand, and £400 million for his 14.5% stake in the bank.

Virgin Money, as it exists today, was formed in 2018 when CYBG acquired Virgin Money and adopted its brand. Branson is commended for his vigilant protection of the Virgin brand, typically through licensing agreements facilitated by Virgin Enterprises. These agreements allow companies to use the Virgin name, even if Branson’s group does not hold a controlling interest in the business.

Some observers in the financial industry speculated that the Virgin Money branding agreement might deter potential bidders for the bank. However, the specifics of this arrangement were outlined in the prospectus issued during CYBG’s acquisition of Virgin Money.

Branson’s business empire has previously tested such agreements in legal battles. For instance, a branding deal between Virgin and Brightline, a Florida-based train operator, included an exit fee of up to $200 million (£160 million).