Virgin Money receives £1.6bn takeover offer

The all-share “preliminary approach”, which values Virgin at about £1.6bn, would create a company with six million personal and business customers and create a leading challenger to Britain’s biggest lenders, CYBG said.

It will add to pressure on competitor TSB – which has five million customers – after it was hit by a botched IT upgrade that left many without online banking.

Shares in Virgin Money climbed 8% in early trading, while CYBG was up 1%.

CYBG said in a statement confirming its offer: “CYBG believes the combination would create the UK’s leading challenger bank offering both personal and SME customers a genuine alternative to the large incumbent banks.

“The combination would provide a powerful full-service banking offer, including leading digital and mobile banking services.”

The group said it represented an “attractive up-front premium” for Virgin Money shareholders, who would own 36.5% of the enlarged lender.

It added that it recognised the “strength and appeal” of the Virgin Money brand and that this would play a “significant role” in the combined business subject to the agreement of Richard Branson’s Virgin Group, currently a major shareholder.

CYBG, which made its stock market debut in 2016 after being spun off by National Australia Bank, said there was no certainty that a formal offer would be made.

Virgin Money, which launched in 1995, expanded with the takeover of Northern Rock in 2011.

It said it was “in the process of reviewing” the proposal from CYBG. – news.sky.com