Virgin Money 

Virgin Money bought by CYBG for £1.7bn

Virgin Money bought by CYBG for £1.7bn

Virgin Money and Clydesdale & Yorkshire Banking Group (CYBG) have agreed a £1.7bn takeover deal that the two claimed would create "the first first true national competitor to the large incumbent banks." 

The deal represents a nearly 20 per cent premium to the closing share price of Virgin Money on 4 May, the first day of the offer period.

Under the terms of the all-share deal each Virgin Money share would be exchanged for 1.2125 new CYBG shares.

The group's operations will come under the Virgin brand in a licensing deal with Virgin Enterprises, the announcement said, warning that up to 1,500 jobs could be at risk.

David Duffy, chief executive of CYBG, said: "The CYBG directors believe that the use of Virgin Money's iconic national brand combined with CYBG's customer-centric propositions will drive further growth opportunities for the combined group.

"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."

Jayne-Anne Gadhia, chief executive of Virgin Money, said: "Our intention has always been to make everyone better off.

"The offer reflects confidence in our strategy, our track record of delivery and the complementary strengths of the two businesses. 

"The combination of Virgin Money with CYBG will have greater scale to challenge the big banks. It will also accelerate the delivery of our strategic objectives, particularly the expansion of the products we offer to customers."

Ms Gadhia has agreed, in principle, to support the combined group as a senior adviser to the chief executive (in a consultancy role) for a period of time beyond completion of the deal, on terms to be agreed.

Mr Duffy will remain as chief executive and chairman of CYBG, while Jim Pettigrew, will remain as chairman.

The registered offices of CYBG and Virgin Money will remain in England following completion of the offer, and the combined group will be headquartered in Glasgow, Scotland.

The take-over announcement was accompanied by a warning that there would be a loss of jobs as a result of the deal.

It is currently expected that the total number of full time employees of the combined group, being approximately 9,500, will reduce by approximately 16 per cent, "some of which will take place via natural attrition," according to the statement.

rosie.murray-west@ft.com