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(Correcting that the valuation of Virgin Money is based on CYBG's closing price on Friday.)
LONDON (Alliance News) - CYBG PLC said Monday that it had made a preliminary offer for a potential deal with Virgin Money Holdings PLC in a bid to create "UK's leading challenger bank".
Under the terms of the deal, the banking group which owns the Clydesdale Bank, Yorkshire Bank and B brands will buy all Virgin Money's issued share capital at an exchange ratio of 1.1297 new CYBG shares per Virgin Money share.
CYBG's offer for Virgin Money is worth GBP1.60 billion based on CYBG's closing share price on Friday.
Virgin Money shareholders would own 36.5% of the newly-formed group.
"The combination would provide a powerful full-service banking offer, including leading digital and mobile banking services, for over 6 million personal and business customers," CYBG said.
Virgin Money confirmed receiving the offer and said its board was in the process of reviewing it.
The bank advised shareholders not to take any action as "there can be no certainty that an offer will be made".
CYBG shares closed at 318.00 pence on Friday and were trading up 2.8% at 327.00p early Monday. Virgin Money ended Friday at 313.00p and were up 9.4% at 341.80p Monday.
