CYBG, owner of Clydesdale Bank and Yorkshire Bank, has agreed to acquire financial services firm, Virgin Money, in a deal valued at around £1.7bn.
The offer values each Virgin Money Share at 371p, based on the closing price of 306p per CYBG Share on 15 June.
Virgin Money shareholders will own 38% of the combined group, following completion of the offer.
CYBG chairman Jim Pettigrew said: “I am delighted we are announcing the combination of the CYBG and Virgin Money businesses. It is clear to us that the Combined Group can transform the UK banking landscape and offer real benefits to customers and communities throughout the UK.”
Virgin Money offers various financial products, including savings, current account, business accounts, mortgages, credit cards, insurance and pensions.
The combined firm is said to provide better services for retail and SME customers. As per terms of the deal, CYBG will use Virgin Money brand for financial services in respect of retail, SME and corporate customers in the UK.
The combination is expected to generate £120m of annual pre-tax cost synergies, in addition to creating a broader-based and less concentrated combined mortgage and unsecured lending portfolio.
Subject to satisfaction of conditions, the deal is expected to complete in the fourth quarter of this year.
Virgin Money CEO Jayne-Anne Gadhia said: “We were the first UK financial services company to offer investment products directly to customers. We transformed the mortgage market and, as a result, saved customers hundreds of millions of pounds by introducing daily mortgage interest calculations.
“In January 2012 we successfully acquired Northern Rock and built a broader business from the solid foundations and wonderful people of the North East of England.”
Clydesdale Bank and Yorkshire Bank offer a range of financial products and services to the customers.
Clydesdale is one of Scotland’s major banks with more than 70 branches, and network of business and private banking centres.
Yorkshire Bank manages over 90 branches, as well as 22 business and private banking centres in the north of England and the Midlands.