CYBG PLC (ASX: CYB)
Revised Proposal for a merger with Virgin Money UK - CYBG PLC, together with its subsidiary undertakings that operate under the Clydesdale Bank, Yorkshire Bank and B brands announced in pursuant to the appropriate Financial Conduct Authority’s (FCA’s) Disclosure and Transparency Rule that the total number of voting rights of the Company were 885,190,976. As on 31 May 2018, the total number of Ordinary Shares were 148,527,438 and the total number of CHESS Depositary Interests were 736,663,538 and there were no shares held in Treasury. In the first half of 2018, the Group continued to make good progress in delivering its strategic priorities and developing CYBG as the leading alternative to the UK’s big banks. In a competitive market, the Group significantly increased underlying profit, up by 28 per cent to £158 million, while achieving 5 per cent annualised lending growth across both mortgages and SMEs.
Recently, the Group confirmed that it had made a preliminary approach regarding a potential all share combination with Virgin Money Holdings (UK) plc (‘Virgin Money’) (the ‘Proposal’) and under the terms of the Proposal, the Group would acquire all the issued and to be issued ordinary share capital of Virgin Money on the basis of an exchange ratio of 1.1297 new CYBG shares for each Virgin Money share and, Virgin Money shareholders would own approximately 38 per cent of the combined group. The transaction will also disclose the cost synergies related to the merger and those arising from removing duplication across the combined Group, by optimising IT Speed and removing duplication of investment speed, by rationalising CYBG’s and Virgin Money’s operations and from increased efficiencies in central procurement and third-party outsourcing costs.
.png)
Capital Position (Source: Company Reports)
The Boards of CYBG and Virgin Money believed that the Proposed Combination would create UK's first true national banking competitor, offering both personal and SME customers an enhanced alternative to the large incumbent banks and would offer the potential for significant synergies. The Board will have to update the market on 18 June 2018 about the ongoing diligence and discussions. The actual number of Virgin Money ordinary shares issued under Virgin Money’s share schemes on proceeding with the Proposed Combination, is expected to be lower once performance conditions and any time pro-rating have been applied.
The mortgage market in 2018 has been more subdued, with good re-mortgage activity, but lower levels of new lending and the competitive environment remain fierce. The Group’s SME pipeline is strong, and it expects to see similar growth in the portfolio over the second half of the year. The Group also expects to see continued, measured growth in unsecured personal lending which is building from a low base. While the UK operating environment continues to remain challenging, the Group believes that CYBG is well positioned to continue delivering on its strategy. Since the start of the year, the stock prices were falling by 14.09 per cent and were down by 9.42 per cent in one month. The stock witnessed a recovery of 6 per cent on 4 June 2018 after an update on the proposal of merger and voting rights. Looking at the trading levels and price to earnings ratio, we maintain our “Expensive” recommendation at the current price of $ 5.3.
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.