HDFC Shares: Shares of HDFC Bank and HDFC zoomed 10 per cent each in early trade after the entities announced a scheme of merger on Monday. HDFC Bank share climbed 9.99 per cent to Rs 1,656.90 against the previous close of Rs 1,506.30 on BSE. Similarly, shares of mortgage lender HDFC gained 10 per cent to Rs 2,696 against the previous close of Rs 2,450.95 today.
Announcing the creation of a financial giant, HDFC Bank on Monday said its board has approved the amalgamation of HDFC Investments and HDFC Holdings with HDFC and that of HDFC into HDFC Bank. As part of the merger between HDFC and HDFC Bank, 42 shares of HDFC Bank would be given for every 25 shares of HDFC.
Post the above, HDFC Bank will be 100 per cent owned by public shareholders and existing shareholders of HDFC will own 41 per cent of HDFC Bank.
Bank of America Merrill Lynch (BofA) Securities were financial advisors to HDFC Limited in the financial transaction.
“The board of directors of HDFC Bank has also accorded approval for the execution of an implementation agreement between HDFC and HDFC Bank, which inter alia sets out the manner of implementing the proposed transaction contemplated under the scheme, the representations and warranties being given by each party and the rights and obligations of the respective parties in relation to the proposed transaction,” the bank said in a BSE filing.
It noted that the scheme is subject to the receipt of requisite approvals from the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), the Competition Commission of India (CCI), the National Housing Bank (NHB), the Insurance Regulatory and Development Authority of India (IRDAI), the Pension Fund Regulatory and Development Authority (PFRDA), the National Company Law Tribunal (NCLT), BSE and the National Stock Exchange of India (collectively, the stock exchanges) and other statutory and regulatory authorities, and the respective shareholders and creditors, under applicable law.
The HDFC twins commanded a m-cap of Rs 13,83,498.26 crore beating that of TCS’ 13,75,071.51 crore market value.
HDFC Bank said the proposed transaction, will enable HDFC Bank to build its housing loan portfolio and enhance its existing customer base. The private lender said the proposed transaction is based on leveraging the significant complementarities that exist amongst the parties.
HDFC Bank is a private sector bank and has a large base of over 6.8 crore customers. The bank platform will provide a well-diversified low-cost funding base for growing the long tenor loan book acquired by HDFC Bank pursuant to the proposed transaction, the bank said.
“A combination of HDFC Limited and HDFC Bank is entirely complementary to, and enhances the value proposition of, HDFC Bank,” it said.
HDFC Bank said it would also benefit from a larger balance sheet and net worth which would allow underwriting of larger ticket loans and also enable a greater flow of credit into the Indian economy. HDFC has invested capital and developed skills and has set up 445 offices across the country.
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