Branson - What's The Deal?

[detached]

Despite his somewhat halting delivery and vacuous-looking perma-smile, Branson is not a stupid guy. Or at least he is good at picking smart advisers.

So, considering that there is almost no value left in NR and serious risks of losing money (lethal cocktail of sub-prime mortgage book and impending HPC), what about if Virgin Money's bid is simply a clever ploy to obtain one or several of the following from Gordon?

- Major reform in rail network franchise/state subsidy rules to encourage high speed trains, ie Smiley Beardy's Virgin Rail (the only one already established in the UK domestic network - Eurostar's UK link is just a small siding within the continental network). GB ensures a bill is passed rigging the market, giving the Great Baloonist the opportunity to extend his rail network. After all, everyone knows that high speed electric trains have a great future.

- High profile (with copious leaks to the media) tax probe in News International/the Murdoch family (it is well know that they have using all sorts of scams for years to reduce their tax liability). Sky badly weakened - Virgin Media wins !

- Additional investigation in British Airways commercial practices giving great marketing opportunities to Virgin Airline.

This all may sound slightly paranoid ..... but I think it's a reasonable question to ask in view of Branson's extensive business interests in so many business sectors.

Other conspirational suggestions welcome ....

[sunonmars]

Despite his somewhat halting delivery and vacuous-looking perma-smile, Branson is not a stupid guy. Or at least he is good at picking smart advisers.

So, considering that there is almost no value left in NR and serious risks of losing money (lethal cocktail of sub-prime mortgage book and impending HPC), what about if Virgin Money's bid is simply a clever ploy to obtain one or several of the following from Gordon?

- Major reform in rail network franchise/state subsidy rules to encourage high speed trains, ie Smiley Beardy's Virgin Rail (the only one already established in the UK domestic network - Eurostar's UK link is just a small siding within the continental network). GB ensures a bill is passed rigging the market, giving the Great Baloonist the opportunity to extend his rail network. After all, everyone knows that high speed electric trains have a great future.

- High profile (with copious leaks to the media) tax probe in News International/the Murdoch family (it is well know that they have using all sorts of scams for years to reduce their tax liability). Sky badly weakened - Virgin Media wins !

- Additional investigation in British Airways commercial practices giving great marketing opportunities to Virgin Airline.

This all may sound slightly paranoid ..... but I think it's a reasonable question to ask in view of Branson's extensive business interests in so many business sectors.

Other conspirational suggestions welcome ....

Somethings amiss with this. I'm sorry but if anyone thinks that if they do takeover NR that they will keep all staff, bloody sure they wont, they will strip mine the company no matter what deal is taken,reduce overheads, shareholders know this. Apparently the market is pricing in NR failure even if taken over by Virgin, so whats the real deal.

[Guest DissipatedYouthIsValuable]

Could he be being blackmailed with the threat of global exposure of photos depicting his unwholesome desires for young ginger transvestites?

[onrollover]

Other conspirational suggestions welcome ....

http://news.bbc.co.uk/1/hi/technology/7112373.stm

Virgin can give us all 50Mbps with a bit of help from the government. BT can't match this so virgin may be able to grab market share for internet with this technology leap.

The discussion today will be "how much support can the government offer to our monopoly forming, oh and sorry about the knife I am holding at your throat."

[yaakov]

Despite his somewhat halting delivery and vacuous-looking perma-smile, Branson is not a stupid guy. Or at least he is good at picking smart advisers.

So, considering that there is almost no value left in NR and serious risks of losing money (lethal cocktail of sub-prime mortgage book and impending HPC), what about if Virgin Money's bid is simply a clever ploy to obtain one or several of the following from Gordon?

- Major reform in rail network franchise/state subsidy rules to encourage high speed trains, ie Smiley Beardy's Virgin Rail (the only one already established in the UK domestic network - Eurostar's UK link is just a small siding within the continental network). GB ensures a bill is passed rigging the market, giving the Great Baloonist the opportunity to extend his rail network. After all, everyone knows that high speed electric trains have a great future.

- High profile (with copious leaks to the media) tax probe in News International/the Murdoch family (it is well know that they have using all sorts of scams for years to reduce their tax liability). Sky badly weakened - Virgin Media wins !

- Additional investigation in British Airways commercial practices giving great marketing opportunities to Virgin Airline.

This all may sound slightly paranoid ..... but I think it's a reasonable question to ask in view of Branson's extensive business interests in so many business sectors.

Other conspirational suggestions welcome ....

not all his business ventures succeed. Virgin Coke and Virgin Media are not great successes.

I'm struggling to understand why he wants to do this.

[Rick62]

I agree, it makes no sense. So he is going to stick in about £500m plus his Virgin Finance (£250m) but also enough loan funding to repay the BOE at least £10billion, and he going to let existing shareholders subscribe £500m and keep 45%? The deal is too good. If I was putting in about £11b to £15b (share and loan) I would be wanting a lot more than 55%.

I suspect that the BOE will be left with the risky half of their lending. I also suspect, as OP says, Branson is doing this to buy favour with the government, anything else his other buisinesses want for the next 10 years (or at least as long as labour stay) he'll get.

Edited November 26, 2007 by Rick62

[Converted Lurker]

not all his business ventures succeed. Virgin Coke and Virgin Media are not great successes.

I'm struggling to understand why he wants to do this.

Vanity.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

Could he be being blackmailed with the threat of global exposure of photos depicting his unwholesome desires for young ginger transvestites?

Whatever happenede to Virgin Coke?

[detached]

Somethings amiss with this. I'm sorry but if anyone thinks that if they do takeover NR that they will keep all staff, bloody sure they wont, they will strip mine the company no matter what deal is taken,reduce overheads, shareholders know this. Apparently the market is pricing in NR failure even if taken over by Virgin, so whats the real deal.

Precisely, NR currently employ nearly 6,000 employees. Staff number was just over 4,000 in early 2005. They obviously took on hundreds of people to process mortgages as they grew their market share like crazy in these 2.5 years.

Now the work in closing saving accounts must be nearly over, there must be a lot of 'excess capacity' at NR.

I listened to the boss of Virgin Money on the radio this morning - she was quite clear that they would stick to 'sensible' mortgage lending - therefore no great prospects for growth in today's market

Since it is very doubtful that the Virgin Group will be able to offer thousands of alternative jobs..... Virgin's pledge to keep most NR jobs appears dubious at best.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

Mmmmmm. Asset strip while in receipt of an interest free 12 billion quid loan for 2-3 years to build up other parts of your business empire? Yummy. Expect Gruffydd and Co. to be a rival bidder!

[canny man]

Branson is no fool. He employs some of the world's best deal makers/negotiators. He has a reputation for driving very hard bargains. His business model is all about using other people's assets, offloading much of the risk and then adding the Virgin brand gloss. Given that the gov't is not in a strong bargaining position, I would expect Branson's team to drive out some very significant terms that will only emerge in the public eye sometime after a deal is done.

[CrashConnoisseur]

Lord Branson of Rockall?

[R K]

He is buying into the income stream from £100bn+ of assets for only £200m of his own cash (plus Virgin Money). I think he is gambling on the eventual return of some sort of normal credit market conditions and the eventual upturn in the banking/lending industry again. If it goes pear-shaped then BOE will still be lender of last resort.

Meanwhile his customers will be paying to put the Virgin Money logo on the barcodes shirts etc etc. He will probably recoup most of his spend through "free" advertising and cross-selling of his other business products to the NR customer base.

I don't yet fully understand why he only wants 55% of the shares though. If he has funding to repay £11bn of BOE lending immediately then he has funding to take 100% control, so there is a strategic reason why he wants to keep the other shareholders in the game. Possibly to avoid legal action, I don't know.

Bit puzzled by the ludicrous jump in the share price this morning, although it is now trading 25% off it's intraday high. Presumably this was short-covering?

[starsign]

Precisely, NR currently employ nearly 6,000 employees. Staff number was just over 4,000 in early 2005. They obviously took on hundreds of people to process mortgages as they grew their market share like crazy in these 2.5 years.

Now the work in closing saving accounts must be nearly over, there must be a lot of 'excess capacity' at NR.

I listened to the boss of Virgin Money on the radio this morning - she was quite clear that they would stick to 'sensible' mortgage lending - therefore no great prospects for growth in today's market

Since it is very doubtful that the Virgin Group will be able to offer thousands of alternative jobs..... Virgin's pledge to keep most NR jobs appears dubious at best.

I watched the CEO of Virgin Money on WOrking Lunch today...she said that they have no plans to cut jobs (at the moment) but jobs will go through natural attrition.

Given that the Virgin brands trades on heaps of goodwill in the UK, I would be surprised if they ended up making high profile redundancies though.

[ollk]

When will Branson next get a chance to bid for the National Lottery contract I wonder?