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CYBG to buy Branson's Virgin Money for £1.7b
CYBG Plc has agreed to buy Virgin Money Holdings UK Plc for about £1.7 billion in an all-stock transaction, creating a bank with about six million customers to challenge Britain's largest lenders.
The purchase of the Richard Branson-backed bank gives consumer and business lender CYBG greater scale, potential cost savings and access to the firm's presence on the high street.
The deal adds to a number of transactions among a handful of smaller banks in the UK as they seek to raise funds and steal business from the nation's top lenders. The combined company will have around £80 billion of assets, according to a statement on Monday.
"Combining these two businesses has much strategic logic, in our view, with CYBG bringing strengths in SME banking and current accounts, complementing Virgin Money's well-recognised brand and strength in credit cards," Gary Greenwood, an analyst at Shore Capital, said in a note to investors.
Virgin Money shareholders would receive 1.2125 new CYBG shares under the offer. Owners of the Branson company will own about 38 per cent of the combined group.
The tie-up is expected to generate £120 million of annual pre-tax cost synergies by the end of the financial year ending September 2021, the statement said. BLOOMBERG