CYBG, Virgin Money merge to take on banks
TRANSACTION WOULD CREATE BRITAIN’S SIXTH-LARGEST BANK
Mid-sized bank CYBG has agreed a £1.7 billion ($2.3 billion; Dh8.28 billion) all-share deal to acquire Virgin Money, which it said will create Britain’s sixth-largest bank by assets and a stronger challenger to the country’s top four lenders.
The deal, the biggest bank merger in Britain since the financial crisis, is on the same terms as CYBG’s sweetened bid earlier this month and will see Virgin Money shareholders, which include entrepreneur Richard Branson, own around 38 per cent of the combined group.
The merged company will be around twice the size of its largest rival among Britain’s smaller banks and be able to draw on the firepower of the Virgin brand, which the combined group will pay a royalty to keep.
CYBG CEO David Duffy, who will lead the new lender with Virgin Money CEO Jayne-Anne Ghadia acting as a senior adviser for an unspecified period of time, said the deal will create a bank with the capability to take on the largest players.
“The combination of CYBG and Virgin Money will create the first true national competitor to the status quo in UK banking, offering a genuine alternative for consumers and small businesses,” he said in a statement.
‘Great deal for both’
Virgin Money shares rose more than 2 per cent before paring their gains to trade little changed at 355p by 8.10am GMT. CYBG shares, which dictate the value of the deal, were also flat at 306.4 pence after initially falling.
The takeover still has to be approved by CYBG and Virgin Money shareholders, but John Cronin, analyst at stockbroker Goodbody, said both sides were likely to agree to the terms.
“Ultimately, we believe this is a great deal for both sets of shareholders and we expect it should receive their support.”
Virgin Money investors will receive 1.2125 CYBG shares per Virgin Money share. Branson owns 35 per cent of Virgin Money. The agreement came after more than a month of talks, and ahead of a deadline yesterday when CYBG, owner of Clydesdale and Yorkshire Bank, either had to make a firm offer or walk away under British takeover rules.