CYBG Signs Deal to Acquire Sir Richard Branson’s Virgin Money for $2.26B

CYBG (CYBG.L), a bank focused on Britain’s retail market as well as small and medium-sized enterprises (SME), disclosed early Monday an agreement to acquire Virgin Money (VM.L) in a 1.7 billion-pound ($2.26 billion) deal, paying a 19% premium to create the UK’s sixth-largest bank with 6 million customers.

Shareholders of Virgin Money, a part of billionaire Sir Richard Branson’s Virgin Group, will get 1.2125 new CYBG shares in exchange for each Virgin Money share, according to a statement from CYBG, which owns the Clydesdale Bank and Yorkshire Bank.

Following the takeover, CYBG will own about 38% of the combined group.

The takeover values Virgin Money at 371 pence per share, implying a multiple of about 1.28 times tangible book value per share as of Dec. 3, 2017. The premium calculations are based on the closing price on May 4, the last business day prior to the start of the offer period.

About 16% of the combined group’s total headcount of 9,500 is expected to be cut as the two lenders merge their operations, but CYBG noted that some of the job losses will come via “natural attrition”.

The deal “will create the first true national competitor to the status quo in UK banking, offering a genuine alternative for consumers and small businesses,” Chief Executive Officer David Duffy said in the statement. “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.”