Tue, 22nd May 2018
The FTSE 100 stood firm on Tuesday, as merger mania hit the news. Virgin Money gained 9% following the news that there had been a bid from CYBG, a rival bank. Meanwhile, Shire finally succumbed to a bid from Takeda, who had already made three prior offers for the company. Sky was also the subject of an offer, from US company Comcast.
CYBG are the owners of Clydesdale and Yorkshire Bank. They gained 1% after announcing that they had made an all-share offer for Virgin Money, which values the bank at £1.6 billion. Virgin is held by several funds, and they gained 28.6p following the talk of the bid. The board says that it is reviewing the proposal, which would see shareholders get 1.1297 CYBG shares per Virgin Money share. CYBG says that they plan to keep the Virgin Money brand, and that they hope it will play a significant role in the combined group. There are six million personal and business customers in the group, and the power of the combined group would make it the largest of the ‘challenger banks’ on the market.
Shares in other challengers Metro Bank and OneSavings Bank each increased by more than three percent as the news of the bid raised the prospect that there could be some more consolidation to come in the sector. There is no certainty that the offer will go ahead, and Virgin Money said that at this time they are not advising shareholders to take any action with regard to the proposal.