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Hdfc, Hdfc Bank will merge;  Ratio 25 Hdfc Shares For 42 Hdfc Bank Shares

The Board of Directors of Housing Development Finance Corporation (HDFC), India’s leading housing finance company with total assets under management of Rs 5.26 trillion and a market capitalization of Rs 4.44 trillion, has approved the merger of the company and its subsidiaries with HDFC Bank, the country’s main private company. sector bank with a market capitalization of Rs 8.35 trillion.

HDFC said the board had approved a composite merger plan for the merger into and with HDFC Bank and its shareholders and creditors.

After the merger, HDFC Bank will be 100% owned by public shareholders and existing HDFC shareholders will own 41% of HDFC Bank.

“The shares held by HDFC Limited and HDFC Bank will be extinguished in accordance with the plan. Accordingly, once the program becomes effective, HDFC Bank will be 100% owned by public shareholders and existing HDFC Limited shareholders will own approximately 41% of HDFC Bank,” said Keki Mistry, VC and CEO of HDFC.

“This is a merger of equals,” said Deepak Parekh, Chairman of HDFC Limited.

The share exchange ratio will be 42 capital shares, credited as fully paid, with a par value of Rs 1 each of HDFC Bank for 25 fully paid capital shares with a par value of Rs 2 each of HDFC .

Completion of the transaction, which is expected to be completed within 18 months, is subject to shareholders, creditors and regulatory approvals including RBI, IRDAI, ICC, SEBI and the stock exchange.

“We wish to inform you that the Board of Directors of Housing Development Finance Corporation Limited (“Company”) at its meeting held today i.e. 4th April 2022, having considered the recommendations and reports respective members of the Audit and Governance Committee of directors of the Corporation and the committee of independent directors of the Company, has notably approved a composite plan of merger (“Plan”) for the merger of: (i) HDFC Investments Limited and HDFC Holdings Limited, wholly owned subsidiaries of the Company, with and in the Company and (ii) the Company with and in HDFC Bank Limited (“HDFC Bank”),” the company said on Monday.

Shortly after the announcement, as the market opened, shares of HDFC Ltd gained 10% while HDFC Bank rose 8.3%.

The merger could lead to the inclusion of HDFC Bank in the MSCI index. Currently, the lender is not included in the index as HDFC’s stake in the lender is considered an FII.

The current combined weighting of the two on Nifty is 15%. After the merger, it will become Nifty’s highest weighted stock.

First post: STI

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