Offer deadline on Monday
CYBG-Virgin Money merger talks focused on senior roles
Jayne-Anne Gadhia: Virgin Money CEO
CYBG and Virgin Money are expected to announce their proposed merger on Monday with attention focusing on who will get the top jobs and where savings will be achieved.
Resolving the top positions has been a key feature of discussions to unite Clydesdale and Yorkshire Banks with Virgin Money and Jayne-Anne Gadhia, CEO of the latter, is a strong candidate to step into the same role in the combined group,
However, David Duffy, her counterpart at CYBG, is said to regard the merger as a crowning moment in his career. Both have led flotations of their respective businesses in the last four years.
Jim Pettigrew, chairman of CYBG, is a non-executive director at Rathbone Brothers which has just announced the takeover of Glasgow wealth manager Speirs & Jeffrey.
CYBG’s board has to announce whether to make a firm offer for Virgin Money by 5pm on Monday, when a deadline set by the UK’s Takeover Panel expires.
Virgin Money has its co-headquarters in Edinburgh’s St Andrew Square (pic: Terry Murden)
The tie-up will create a larger challenger bank and is likely to be agreed on terms close to CYBG’s revised offer, but will include cost savings which could mean more branch closures.
Virgin Money has been pressing to retain the brand in the merged business although it is not clear what commitment it has to its co-head office in Edinburgh. CYBG is investing in a new group headquarters in Bothwell Street, Glasgow.
The proposed offer is in CYBG shares and a dip in its price soon after the offer was announced is why the revised terms put a slightly lower value on Virgin, which is about £1.6 billion.
The latest proposal involves exchanging 1.2125 new shares for each share in Virgin Money, giving Virgin shareholders 38% of the combined group against 36.5% in the earlier offer tabled in early May.
Sir Richard Branson, who owns 34.8% of Virgin Money, is poised for a £500 million payday if the deal goes through.
A combination with CYBG — which has only a small credit card business — would reduce the relative exposure of Virgin’s balance sheet to credit card risks identified by the Bank of England last week.