HDFC Shares: After the organizations revealed a merger plan on Monday, shares of HDFC Bank and HDFC soared 10% each in early trade. In comparison to its previous BSE closing of Rs 1,506.30, HDFC Bank's share price increased by 9.99% to Rs 1,656.90. Similar to this, shares of mortgage lender HDFC increased 10% today from their previous closing of Rs 2,450.95 to Rs 2,696.
The merger of HDFC Investments and HDFC Holdings with HDFC and that of HDFC into HDFC Bank has been approved by the board of directors of HDFC Bank, the company said on Monday in announcing the establishment of a financial behemoth. 42 shares of HDFC Bank would be distributed for every 25 shares of HDFC as part of the merger between HDFC and HDFC Bank.
Following the aforementioned, existing HDFC shareholders will own 41% of HDFC Bank, making public shareholders the sole owners of HDFC Bank.
In the financial transaction, HDFC Limited received financial advice from Bank of America Merrill Lynch (BofA) Securities.
According to a BSE filing by the bank, "The board of directors of HDFC Bank has also accorded approval for the execution of an implementation agreement between HDFC and HDFC Bank, which among other things outlines the method of carrying out the proposed transaction contemplated under the scheme, the representations and warranties being given by each party, and the rights and obligations of the respective parties about the proposed transaction."
The National Housing Bank (NHB), the Insurance Regulatory and Development Authority of India (IRDAI), the Pension Fund Regulatory and Development Authority (PFRDA), the National Company Law Tribunal (NCLT), the Securities and Exchange Board of India (SEBI), the Competition Commission of India (CCI), the BSE, and the National Stock Exchange of India (collectively, the stakeholders) must all approve the scheme.
The market value of the HDFC twins, which outperformed TCS' 13,75,071.51 crore market value, was Rs 13,83,498.26 crore.
According to HDFC Bank, the planned merger will allow it to expand its client base and increase its portfolio of housing loans. The proposed transaction, according to the private lender, is focused on leveraging the substantial complementarities between the parties.
Private sector bank HDFC Bank has a sizable customer base of more than 6.8 crore people. According to the bank, the bank platform will offer a well-diversified, low-cost funding basis for expanding the long-tenor loan book that HDFC Bank will acquire as part of the proposed transaction.
It stated that combining HDFC Limited and HDFC Bank would "completely complement and strengthen the value proposition of HDFC Bank."
A larger balance sheet and net worth, according to HDFC Bank, would allow for the underwriting of larger ticket loans and would also permit a greater flow of credit into the Indian economy. HDFC has established 445 offices around the nation after investing money and developing its workforce.