CYBG to acquire Virgin Money for £1.7bn
CYBG, the owner of Yorkshire Bank and Clydesdale Bank, has this morning announced its deal to buy Virgin Money for £1.7bn has been agreed by shareholders.
The extended deadline for CYBG’s bid for Virgin Money was set to expire at 5pm today but CYBG this morning announced the recommended all-share offer on the markets, stating: “The Boards of CYBG and Virgin Money Holdings (UK) are pleased to announce that they have agreed the terms of a recommended all-share offer to be made by CYBG for Virgin Money to create the UK’s first true national banking competitor to the status quo.”
CYBG shareholders will own 62% of the enlarged group, with Virgin Money shareholders owning 38%. The group will double in size, serving 6 million customers with total lending of £70bn. It will employ 9,500 people and have 250 branches nationwide.
Under the terms of the deal, Virgin Money shareholders will get 1.2125 new CYBG shares for every Virgin Money share they hold.
It will also be double the size of the nearest challenger bank and the sixth largest bank in the country. CYBG said it would be a “leading force in the Open Banking environment, disrupting the status quo and championing customer service excellence in financial services.”
CYBG said immediate preparations would be made to re-brand the group’s entire retail operation to the Virgin Money brand, with the rest of the customer base transferring to this single, powerful brand in due course.
The bank said there were significant synergies including a pre-tax run rate cost synergies of £120m by the end of the third year post completion and the bringing together of two low-risk balance sheets.
The migration of Virgin Money customers to CYBG’s platform will be phased over three years. CYBG added: “This technology platform is well-established and scalable and has already seen the successful migration of over 2 million Clydesdale and Yorkshire Bank customers without issue.”
David Duffy, chief executive of CYBG, said: “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.
“By combining two of the UK’s leading challenger banks, we will create a national, full service bank with the capabilities needed to compete effectively with the large incumbent banks. We are bringing together CYBG’s 175-year heritage in serving retail and SME customers and advanced digital technology, with the iconic Virgin Money brand and consumer champion credentials.
“Together we will serve around six million customers, with the scale, capabilities and financial muscle to disrupt the status quo – and with a clear ambition to provide our customers with the best service in the UK.
“CYBG and Virgin Money have similar values, with strong roots in our regional heartlands and a shared vision for how the Combined Group can be a leading force in the banking model of the future, whilst maintaining our strong people-focused values. I am hugely positive about what we can achieve together with the talent that is available on both sides.
“The strategic rationale is clear and offers both sets of shareholders real value, material earnings accretion, and enhanced capital generation for the benefit of all shareholders, together with both firms’ customers, colleagues and local communities.”
Jim Pettigrew, chairman of CYBG, David Duffy, CEO of CYBG and Ian Smith, CFO of CYBG will retain their current positions in the combined group.
Jayne-Anne Gadhia, CEO of Virgin Money has been in her current role with Virgin Money for over 10 years. She has agreed, in principle, to support the Combined Group as a senior adviser to the CEO for a period of time beyond completion of the Offer.
Two of the non-executive directors currently on the Virgin Money Board, as well as one non-executive director nominated by Virgin Enterprises, will become members of the CYBG board on completion of the offer.
The registered offices of CYBG and Virgin Money will remain in England following completion, and the combined group will be headquartered in Glasgow, Scotland.
