The acquisition sees the creation of the 6th largest bank in the UK.
On Monday, in a development that witnesses the creation of the 6th biggest bank in Britain, CYBG, a mid-sized bank, has agreed to acquire Virgin Money for $2.26 billion (1.7 billion pound).
The all-share deal will now pose a challenge to the country’s top four lenders.
The deal sees Virgin Money’s shareholders receiving 1.2125 CYBG shares per Virgin Money share and they will hold around 38% of the combined group.
The deal creates Britain’s sixth largest bank, by asset,nearly double the size of its largest rival.
Incidentally, Richard Branson owns around 35 percent of Virgin Money.
The combined company will be led by CYBG’s CEO David Duffy and will see Virgin Money’s CEO, Jayne-Anne Ghadia, acting as a senior advisor for an unspecified period of time.
“The combination of CYBG and Virgin Money will create the first true national competitor to the status quo in UK banking, offering a genuine alternative for consumers and small businesses,” said Duffy in a statement.
Despite its size, CYBG is likely to face a steep climb to the hill top dominated by Britain’s top four such as the Royal Bank of Scotland and the Lloyds Banking Group.
CYBG will pay a fixed royalty, starting at 12 million pounds in the first year and rising to 15 million pounds in the fourth, to keep the Virgin Money brand. Additional royalty could kick in the fourth or the fifth year, depending on whether CYBG’s turnover reaches a certain threshold.
Jim Pettigrew, CYBG’s chairman as well as Ian Smith, its finance director will retain their roles in the combined company.