Clydesdale Bank owner CYBG Plc, which last month revealed a £202 million (around AU$359 million) charge for payment protection insurance (PPI) claims, is snapping up Virgin Money Holdings (UK) Plc for £1.7 billion (around AU$3.024 billion) through an all-share offer.
In an announcement today, CYBG said shareholders of Virgin Money will be entitled to receive 1.2125 new CYBG shares in exchange for each Virgin Money share – resulting in the investors owning approximately 38% of the combined group.
Founded by Sir Richard Branson, Virgin Money offers insurance, mortgages, as well as savings and credit cards. It does so through multi-channel distribution, including digital platforms.
“The CYBG directors believe that the successful banking propositions of the future will be digitally-led customer experiences supported by exceptional omni-channel service, with the winners delivering technology-enabled, customer-centric propositions that resonate with and enhance customers’ lifestyles,” explained CYBG. “Recognising these underlying industry trends, the combination will bring together the complementary strengths of two successful challenger banks to create the UK’s first true national competitor to the large incumbent banks.”
According to a Bloomberg report, Virgin Money’s shares rose 2.4% to 363.4 pence at 8:08 this morning in London. Meanwhile The Guardian, which said Branson owns a 35% stake in Virgin Money, reported that over 1,500 jobs will be cut as part of the takeover.
The imminent job cuts have been acknowledged by CYBG.
“Recognising that there will be a loss of jobs as a result of the combination, the independent Virgin Money directors welcome CYBG’s intention to leverage the best talent of both Virgin Money and CYBG colleagues,” said the acquiring firm in its announcement.
