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HDFC and HDFC bank have seen their stock rise 10% in early trade after the companies revealed a merger plan today. On the BSE, HDFC Bank’s stock jumped 9.99 percent to Rs 1656.90, up from Rs 1506.30 at the previous close. On the BSE, shares of mortgage lender HDFC surged 10% to Rs 2696 today, up from the previous closing of Rs 2450.95.
HDFC Bank’s board of directors approved the merger of HDFC Investments and HDFC Holdings with HDFC and HDFC into HDFC Bank on Monday, announcing the establishment of a financial giant. In the merger between HDFC and HDFC Bank, 42 HDFC Bank shares will be exchanged for every 25 HDFC shares.
Following the above mentioned, public shareholders will own 100% of HDFC Bank, while existing HDFC shareholders own 41% of the company.
HDFC Limited received financial advice from Bank of America Merrill Lynch (BofA) Securities in the transaction.
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The Bank said in a BSE Filing that The board of directors of HDFC Bank has also given its approval for the execution of an implementation agreement between HDFC and HDFC Bank, which among other things, sets out the manner of implementing the proposed transaction contemplated under the scheme, the representations and warranties being given by each party, and the respective parties’ rights and obligations concerning the proposed transaction.
The HDFC twins had a market capitalization of Rs 13,83,498.26 crore, which was more than TCS’ market capitalization of Rs 13,75,071.51 crore.
According to HDFC Bank, the planned merger will allow the Bank to expand its housing loan portfolio and expand its existing client base. According to the private lender, the planned transaction is focused on leveraging the companies’ considerable complementarities.
HDFC Bank is a private sector bank with a customer base of more than 6.8 crores. According to HDFC Bank, the bank platform will provide a well-diversified low-cost funding basis for increasing the long-tenor loan book acquired as part of the proposed acquisition.
A stronger balance sheet and net worth, according to HDFC Bank, would allow for the underwriting of larger ticket loans and a greater flow of credit into the Indian economy. HDFC has established 445 offices around the country, having invested capital and acquired talents.
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