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HDFC, HDFC Bank to merge. What shareholders should know in 10 points

1 min read 04 Apr 2022, 09:10 AM IST Livemint

Post the merger, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC Limited will own 41% of HDFC Bank

Housing Development Finance Corporation (HDFC) Limited on Monday announced that its board at its meeting held today has approved a composite scheme of amalgamation, for the merger of into and with HDFC Limited into HDFC Bank, and their respective shareholders and creditors.

Shares of HDFC Ltd and HDFC Bank surged over 15% respectively on the BSE in Monday's early trading session after the merger announcement, lifting the indices higher.

HDFC, HDFC Bank merger details in 10 points -

The share exchange ratio for the amalgamation of HDFC Limited with and into HDFC Bank shall be 42 equity shares (credited as fully paid up) of face value of Re 1 each of HDFC Bank for every 25 fully paid-up equity shares of face value of ₹2 of HDFC Limited.
Upon the Scheme becoming effective, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC Limited will own 41% of HDFC Bank.
Upon the Scheme becoming effective, HDFC Bank will issue equity shares (in the share exchange ratio as mentioned above) to the shareholders of HDFC Limited as on the record date. The equity share(s) held by HDFC Limited in HDFC Bank will be extinguished as per the Scheme.
The subsidiaries and associates of HDFC Ltd will shift to HDFC Bank.
The proposed transaction will result in reducing HDFC Bank's proportion of exposure to unsecured loans.
As on date, HDFC Limited, along with two of its wholly-owned entity with whom the subsidiaries, holds 21 .00% of paid-up equity share capital of HDFC Bank.
"The Boards of HDFC Limited and HDFC Bank believe that the merger will create long-term value for all stakeholders, including customers, employees and shareholders of both entities. The amalgamation of the two entities will provide further impetus to the Government’s vision of “Housing for All"," HDFC said in the exchange filing.
Post the combination, HDFC Bank’s customers will be offered mortgages as a core product in a seamless manner. HDFC Bank will also leverage the long tenor mortgage relationship to offer varied credit and deposit products enabled through better insights through-out the customer life-cycle.
The Scheme is subject to the receipt of requisite approvals from the statutory and regulatory authorities, and the respective shareholders and creditors.