Clydesdale and Yorkshire Bank (Google Finance: CYBG PLC/IDR UNRESTR) (ASX: CYB) was the top gainer on the ASX200 on Monday, up 5% to $5.26.
The UK-based lender, listed in both London and Sydney, made a revised proposal for a merger with Virgin Money UK, leading to the creation of a new financial group serving around 6 million personal and business customers.
Under the terms of the new proposal, Clydesdale and Yorkshire Bank will acquire the entire share capital of Virgin Money issuing 1.21 new shares in exchange for each share in Virgin.
Virgin Money shareholders would end up owning about 38% of the combined entity. The exchange ratio outlined in the new offer is 7% higher than the one from the first proposal presented on May 7.
The two parties are negotiating other terms and conditions and conducting reciprocal due diligence. The two companies believe the merger would create a new entity capable of competing with large incumbent banks thanks to a nationwide presence and an enhanced offer to retail customers and small and medium enterprises.
The transaction would also disclose cost synergies thanks to the rationalisation of operations and the reduction in investment and IT spending.
