India’s stock exchanges have issued a no-objection certificate for merger of Housing Development Finance Corp. Ltd. with HDFC Bank Ltd., paving the way for the biggest corporate merger in the country’s history.
HDFC Bank has received observation letter with “no adverse observations” from BSE Ltd. and observation letter with “no objection” from the National Stock Exchange of India Ltd., both dated July 2, 2022, according to an exchange filing on Saturday.
“The scheme remains subject to various statutory and regulatory approvals inter alia including approvals from the Reserve Bank of India, Competition Commission of India, National Company Law Tribunal and the respective shareholders and creditors of the companies involved in the scheme, as may be required,” the filing stated.
On April 4, HDFC Bank — India’s biggest private sector lender — agreed to take over HDFC — India’s biggest mortage lender — in a deal valued at about $40 billion. The merged entity will have a combined asset base of around Rs 18 lakh crore. The merger is expected to be completed by the second or third quarter of FY24, subject to regulatory approvals.
Upon completion of the merger, HDFC Bank will be 100% owned by public shareholders, and existing shareholders of HDFC will own 41% of the bank. Every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares held.
The observation letter by the BSE said the company is advised to disclose the details of all the actions taken by SEBI or any other regulator against any of the entities, its directors/promoters and promoter group, in the petition to be filed before NCLT.
The company shall ensure that no changes to the draft scheme except those mandated by the regulators or tribunals should be made without specific written consent of SEBI, it said. The amalgamated company is advised that the proposed equity shares issued in terms of the scheme should mandatorily be in dematerialised form only.
Following the HDFC-HDFC Bank merger, the combined balance sheet will be Rs 17.87 lakh crore and the net worth will be Rs 3.3 lakh crore, as of December 2021.
As on April 1, 2022, the market capitalisation of HDFC Bank was Rs 8.36 lakh crore ($110 billion) and that of HDFC Rs 4.46 lakh crore ($59 billion).
Post-merger, HDFC Bank will be twice the size of ICICI Bank, which is the third-largest lender at present.