Virgin Money Says CYBG Made $2.2 Billion Preliminary Offer

(Bloomberg) -- Virgin Money Holdings U.K. Plc, the challenger bank backed by billionaire Richard Branson, said it received a preliminary offer from CYBG Plc that would the lender at 1.6 billion pounds ($2.2 billion).

Virgin Money’s board is still reviewing the proposed deal, in which investors would receive 1.13 shares of CYBG for each Virgin Money share they own, the Newcastle upon Tyne-based bank said Monday in a statement. At each bank’s closing price Friday, that would Virgin Money shares at 359 pence, a 15 percent premium.

“CYBG believes the combination would create the U.K.’s leading challenger bank offering both personal and small to medium enterprise customers a genuine alternative to the large incumbent banks,” it said in a statement on Tuesday.

Virgin Money told its shareholders “to take no action in relation to this proposal,” which it said it released without the consent of CYBG. “There can be no certainty either that an offer will be made or as to the terms of any offer, if made.”

The company, which bought nationalized Northern Rock Plc in 2011 from the British government, is among a group of so-called British challenger banks. As of March 31, Virgin had 31 billion pounds in deposits.

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