The merger of IDFC Limited and IDFC First Bank, which is considered to be India’s largest corporate deal, has been approved by the board of directors of IDFC First Bank Limited. The planned merger will combine the two components into a single organization and enhance corporate structure. The announcement follows the $40 billion merger of HDFC and HDFC Bank by only a few days.
For the amalgamation, 155 value pieces of IDFC First Bank will be exchanged for every 100 value sections of IDFC Restricted. Based on audited financial accounts as of March 31, 2023, it is projected that when the merger closes, IDFC First Bank’s standalone book value per share will increase by 4.9%.
Shares of IDFC First Bank fell 6%.
Following the revelation of the swap ratio for the planned merger between the two organizations, which is favorable to IDFC investors, shares of IDFC First Bank fell by over 6% on Tuesday’s exchange while shares of IDFC Limited rose by over 6%.
For the merger of IDFC and IDFC First Bank, 155 value portions of IDFC First Bank’s assumed Rs. 10 worth will be exchanged for every 100 value sections of IDFC Limited’s assumed Rs. 10 worth. According to Nuvama, the share swap ratio was in favor of the target firm (IDFC Ltd.), and it compares to 1.55 while Nuvama Alternative was constructing at 1.40 and 1.60.
On the BSE, shares of IDFC First Bank fell 5.9% to a low of Rs 77.10. However, after rising as much as 6.04 percent to a high of Rs 115.70 in early trading, IDFC shares eventually had their gains cut to 0.46 percent, closing at Rs 109.60 per share. Following the news of the consolidation, CLSA has continued to maintain an underweight position on IDFC First Manage an account with a target of Rs 85.
Conclusion:-
The board of directors of IDFC First Bank Limited approved the merger of IDFC Limited and IDFC First Bank. This is considered to be India’s largest corporate deal. The merger will combine the two components into a single organization, enhancing corporate structure. The merger will involve 155 value pieces of IDFC First Bank exchanged for every 100 value sections of IDFC Restricted. As of March 31, 2023, IDFC First Bank’s standalone book value per share is projected to increase by 4.9%. Shares of IDFC First Bank fell by over 6% on Tuesday’s exchange, while shares of IDFC Limited rose by over 6%.
The share swap ratio favors IDFC Ltd., with Nuvama comparing it to 1.55. IDFC shares closed at Rs 109.60 per share. CLSA maintained an underweight position on IDFC First Manage, with a target of Rs 85.
