Merger offer raised by CYBG with Virgin Money

CYBG, the owner of Clydesdale and Yorkshire banks, has reportedly given Virgin Money a revised offer of £1.7bn in order to merge and create a challenger bank that would be worth £4bn.

CYBG’s interest in Virgin Money surfaced early last month, when a preliminary approach was made by the company, which valued the latter at £1.6bn, offering 1.1297 of its shares in return for all shares of Virgin Money.

As the situation currently stands, CYBG has until 12pm on Monday to make a firm offer or abandon the proposal under rules that the Takeover Panel of the UK established. Sky News has quoted a number of sources saying that “positive discussions” were being held by both sides and that the Takeover Panel was likely to be asked to push the deadline back by another week in order to give them to time to make a formal agreement.

Entrepreneur Richard Branson founded Virgin and remains a part-owner of the company. The company has kept silent about the offer following the first bid, revealing only that the proposal was being reviewed. If the merger is approved, the result would be a personal and SME banking group with 6 million existing customers and a £70bn balance sheet.

The merger could also be crucial for the UK’s banking market, testing the potential of medium-sized businesses to be able to take on the five biggest nationwide banks – Barclays, HSBC, Lloyds, RBS and Santander. No comments have been issued by either Virgin Money or CYBG.