Key Updates on the Merger
HDFC shares rose about 2.3% on June 27 as the merger between HDFC and HDFC Bank is expected to be completed by July 1, according to HDFC Chairman Deepak Parekh. The merger, which has been in progress since April 2022, will make HDFC Bank wholly owned by public shareholders and the resulting company a leading player in the Indian banking industry.
Merger Ratios and Shareholder Stakes
Parekh said on June 27 that HDFC Bank and HDFC Ltd will hold separate board meetings on June 30 to complete the merger process. All necessary approvals have been obtained, and HDFC Ltd shares are expected to be delisted by July 13th.
Under the scheme of amalgamation, HDFC's shareholders will receive 42 shares of HDFC Bank for every 25 shares of HDFC they hold. This Swap Ratio of 25:42 ensures that HDFC Bank will be wholly owned by public shareholders, with HDFC shareholders owning a 41% stake in the merged entity.
Sale of HDFC Credila and Regulatory Approvals
In addition to the merger, HDFC Ltd has also signed a definitive document to sell approximately 90% of its education loan subsidiary, HDFC Credila, to a consortium of private equity firms BPEA EQT and ChrysCapital for approximately Rs 906 crore. Mr Parekh expressed optimism that regulatory approval from the Competition Commission of India (CCI) for the sale of HDFC Credila could be obtained within a month from 15 days.
Regulatory Oversight and Market Reaction
Regulators such as the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the Competition Commission of India (CCI) are involved in overseeing the merger and issuing the necessary approvals. The Court of the National Company Law Court (NCLT) of Mumbai also contributed to the merger process.
The market reaction to the news of the impending merger was positive, with shares of HDFC and HDFC Bank on an upward trend. On June 27, HDFC shares rose by around 2.1%, and on June 28, HDFC shares rose by 0.6%. Similarly, HDFC Bank's share price rose by 1.75% on June 27 and increased by 1.1% on June 28, trading at Rs 2,779.00 and Rs 1,676.15 respectively on the National Stock Exchange (NSE).
The completion of the merger of HDFC and HDFC Bank is a significant milestone for the Indian banking industry and is highly anticipated by market participants, shareholders, and stakeholders alike.
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