HDFC and HDFC Bank merger: The merger of HDFC with HDFC Bank is estimated to become the third largest company in India in terms of market capitalisation.
In an exchange filing, HDFC announced that the company will merge with HDFC Bank after the amalgamation of its subsidiaries HDFC Holdings and HDFC Investments.
The new entity will have these benefits
HDFC said in a filing, “The proposed transaction will create meaningful value for various stakeholders including shareholders, customers, employees, as the combined business enhances the ability to synergize with business, product offerings, balance sheet flexibility and revenue opportunities.” Will happen.”
HDFC-HDFC Bank Merger: HDFC will be merged with HDFC Bank, know what is the full plan
HDFC said its shareholders will get 42 shares of HDFC Bank for every 25 shares held by the non-banking lender.
Valuation may be 13 lakh crores
Based on the market capitalization as of April 1, the market value of the merged entity would be around Rs 12.8 lakh crore. HDFC said it will hold 41 per cent stake in the new entity.
After this announcement, HDFC Bank’s stock rose almost 9 percent and HDFC’s stock rose 10 percent. At 11 am, HDFC Bank’s stock is trading 11 percent and HDFC’s stock is trading with a strength of 13 percent.
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HDFC Ltd Chairman Deepak Parekh said in a statement, this is a merger of equals. Over the years, there has been a convergence in the regulation of banks and NBFCs, paving the way for this possible merger.
Nifty50 may have the highest weight
Analysts said that post the merger, HDFC Bank will be the largest stock in the Nifty50 index by weight, easily overtaking Reliance Industries’ current weight of 11.9 per cent. As of March 31, HDFC Bank’s weight in the index stood at 8.4 per cent, while that of HDFC was 5.66 per cent.
Analysts said the merger benefits HDFC due to higher cost of funds for non-banking entities in India as compared to lenders. Given the potential for further interest rate hikes, the merger could bring down HDFC’s cost of funding.
HDFC, HDFC Bank underperformed in 18 months
Some market participants speculated that the move was due to the weak performance of HDFC and HDFC Bank over the past 18 months despite the spurt in the equity market post-Covid.
Before the merger, HDFC’s stock was around 52-week low, while HDFC Bank’s stock gained just 4 per cent last year.
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