Kotak Mahindra Bank to buy ING Vysya for Rs15,000 crore
21 Nov 2014 11:37 PM GMT
In the all-share deal, 725 equity shares of Rs 5 each (face value) of Kotak Mahindra will be issued for every 1,000 shares of Rs 10 each held in ING Vysya Bank. Post-merger, Dutch lender ING Group NV which currently holds 42.73 per cent stake in ING Vysya Bank, will become the second largest shareholder in Kotak Mahindra Bank at 6.5 per cent.
The holding of Kotak Mahindra Bank Vice-Chairman and Managing Director Uday Kotak in the merged entity too will be diluted to 34 per cent from 39.71 per cent. The deal will help him to comply with the Reserve Bank of India’s (RBI) directive of bringing his stake down to 30 per cent by the end of 2016. The combined banking entity will have a network of 1,214 branches across the country.
Announcing the deal, Kotak said that it is expected to close by April 1 after it gets all statutory approvals, including from the RBI and Competition Commission of India (CCI). The share swap ratio announced indicates a price of Rs 790 for each ING Vysya Bank share based on average closing price this month, valuing the deal at just over Rs 15,000 crore.
ING Vysya Bank shares closed 7.15 per cent at Rs 814.20 per on the Bombay Stock Exchange (BSE) ahead of the announcement which came after trading hours. Kotak Mahindra Bank too jumped by 7.28 per cent to close at Rs 1,157.05 per unit at the BSE.
This is the first amalgamation of a profit-earning entity since the global financial meltdown in 2008. Although two more mergers took place during this period, those were amalgamations under different circumstances.
In 2010, Bank of Rajasthan was merged with country’s largest private sector lender ICICI Bank.
Bank of Rajasthan was a loss-making entity and its networth had turned negative. A subsidiary of SBI, State Bank of Indore was merged with the parent in the same year. This was in continuation of the proposed policy of amalgamation of its subsidiaries over a period of time.
The holding of Kotak Mahindra Bank Vice-Chairman and Managing Director Uday Kotak in the merged entity too will be diluted to 34 per cent from 39.71 per cent. The deal will help him to comply with the Reserve Bank of India’s (RBI) directive of bringing his stake down to 30 per cent by the end of 2016. The combined banking entity will have a network of 1,214 branches across the country.
Announcing the deal, Kotak said that it is expected to close by April 1 after it gets all statutory approvals, including from the RBI and Competition Commission of India (CCI). The share swap ratio announced indicates a price of Rs 790 for each ING Vysya Bank share based on average closing price this month, valuing the deal at just over Rs 15,000 crore.
ING Vysya Bank shares closed 7.15 per cent at Rs 814.20 per on the Bombay Stock Exchange (BSE) ahead of the announcement which came after trading hours. Kotak Mahindra Bank too jumped by 7.28 per cent to close at Rs 1,157.05 per unit at the BSE.
This is the first amalgamation of a profit-earning entity since the global financial meltdown in 2008. Although two more mergers took place during this period, those were amalgamations under different circumstances.
In 2010, Bank of Rajasthan was merged with country’s largest private sector lender ICICI Bank.
Bank of Rajasthan was a loss-making entity and its networth had turned negative. A subsidiary of SBI, State Bank of Indore was merged with the parent in the same year. This was in continuation of the proposed policy of amalgamation of its subsidiaries over a period of time.
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