The de-Australianisation of UK challenger banking group, CYBG will continue with the news that Virgin Money has agreed to be taken over in a $US1.7 billion all paper deal.
CYBG which owns Yorkshire and Clydesdale Banks was spun out of the National Australia Bank two years ago to NAB shareholders who still dominate the share register.
The boards of the two groups announced they had reached an agreement on Monday without CYBG offering any further improvement to its previous offer of 1.2125 new shares per Virgin Money share. The deal will give Virgin’s shareholders a 38% stake in the combined group.
The merger will create Britain’s 6th largest bank and will see 1,500 jobs lost over time as the combined bank looks for £120 million of annual savings by reducing overlap between their operations. This will result in a 16% reduction in the combined group’s workforce that CYBG hopes to achieve by attrition,
CYBG has agreed to pay upwards of £15 million a year for use of the Virgin name. It will have 9,500 employees, 250 branches and total lending of £70 billion.
CYBG’s existing leadership team will take charge of the enlarged group, with Virgin boss Jayne-Anne Gadhia agreeing to become a senior adviser to chief executive David Duffy in a “consultancy role” for an undetermined period of time.
CYBG chair, Jim Pettigrew said in a statement: “It is clear to us that the combined group can transform the UK banking landscape and offer real benefits to customers and communities throughout the UK. Since our IPO in 2016, the CYBG board and leadership team has established CYBG as a strong and sustainable business, with a track record of delivery and the credentials to deliver a transformational combination with Virgin Money”.
CYBG made a preliminary approach for Virgin last month and an agreement had been widely expected after the two banks asked for an extension to the bidding deadline a fortnight ago to allow negotiations to be completed.
