Firm quartet act as Virgin Money bids for nationalised Rock

Allen & Overy (A&O), Herbert Smith and Ashurst have taken roles on Virgin Money's £747m acquisition of Northern Rock, the retail bank that was nationalised in 2008 after becoming one of the most high-profile UK casualties of the financial crisis.

Virgin Money, part of Richard Branson's Virgin Group business conglomerate, has instructed longstanding adviser A&O on the deal, which will see the Government receive £747m cash on completion, with the potential to gain more than £1bn in total. The magic circle firm is fielding a team led by corporate head Andrew Ballheimer.

Virgin submitted an initial expression of interest in Northern Rock in July, and in late October put a formal offer on the table, with the Royal Bank of Scotland (RBS) providing financing.  The acquisition was confirmed earlier today (17 November). RBS instructed the bank's former UK corporate and restructuring head Lee Doyle – now a partner at Ashurst – to advise it on the bid.

As Legal Week reported in June, Freshfields Bruckhaus Deringer has taken the lead role to jointly advise Northern Rock and its owner, UK Financial Investments, the body which manages the Government's stakes in UK banks.

Corporate partner Barry O'Brien, a longstanding adviser to the Newcastle-based lender's board, is leading the team advising Northern Rock, working alongside global head of finance Alan Newton. Herbert Smith, meanwhile, has taken a role for Virgin Money's financial adviser Greenhills.

One adviser commented: "The main law firms involved are Freshfields and A&O – all the other firms have taken minor roles that will not generate a lot of fee income."

It is understood that NBNK, a new banking venture co-founded by Lloyd's of London chairman Lord Levene, has also submitted a bid for Northern Rock. NBNK is also currently bidding for 630 bank branches that Lloyds Banking Group has been ordered to dispose of by regulators. Linklaters is advising Lloyds on the sale.