Another merger has sparked frenzy as HDFC and HDFC Bank have announced a transformational merger today.
The merger of India’s largest housing finance company (HDFC Ltd.) with the largest private bank (HDFC Bank) will bring the former under the wings of the latter. The merger process will take about 12-18 months.
Following news of the merger, the HDFC twins saw their combined market values surpassing that of the second most-valued stock on Dalal Street, TCS.
Who stomps whom?
42 shares of HDFC Bank would be given for every 25 shares of HDFC as part of the deal. Existing shareholders of HDFC will own 41 per cent of HDFC Bank. The public shareholders of HDFC Bank will become 100% shareholders of HDFC Ltd.
While the shares of HDFC were up by 15%, HDFC Bank’s shares were up by nearly 14% as of 10:15 a.m., on April 4.
Chairman Deepak Parekh calls it a “merger of equals” and HDFC Bank will transform into an even larger lender by global standards. It is expected that there will be more room for FII holding in HDFC Bank.
Additionally, the proposed deal will help HDFC Bank to build its housing loan portfolio and enhance its existing customer base. The bank said that it will leverage the significant complementarities that exist amongst the two parties.
Too long? Here’s a one-liner: HDFC Housing Finance all set to merge with HDFC Bank allowing them to better cross-sell their products, combined market values soar 9%.