Moneycontrol Bureau
Investors lapped up huge shares of Kotak Mahindra Bank on Friday after the private sector lender announced the acquisition of mid-sized player ING Vysya Bank in an all-share transaction. The stock rallied as much as 9 percent in early trade to touch a record high of Rs 1,260.90 while ING Vysya Bank gained 3.8 percent.
After the merger, Kotak Mahindra Bank will become India's fourth largest private sector lender. The merger would be done through a share swap in which 725 equity shares of Rs 5 each of Kotak Mahindra will be issued for every 1,000 shares of Rs 10 each held in ING Vysya Bank.
This merger is subject to approval of shareholders of both the banks. It also requires statutory nod from the Reserve Bank of India and and Competition Commission of India (CCI).
The swap ratio indicates price of Rs 790 for each ING Vysya Bank share. The proposed merger would result in issuance of approximately 15.2 percent of the equity share capital of the merged Kotak, the press statement added.
Upon merger ING will be the second largest shareholders and 17 Kotak subsidiaries will be subsidiaries of merged entity.
Speaking at a press briefing while announcing the contours of the merger, Uday Kotak said that the bank will leverage digital banking strength of ING Vysya Bank. Upon Merger, Kotak Mahindra Bank will have 1,214 branches. "The branch density is complementary in Mumbai and Delhi at 124 each," he added.
The Deputy CEO of ING Vysya Bank Uday Sareen will be inducted into top management of Kotak Mahindra Bank. Netherlands-based ING holds 42.73 percent stake in ING Vysya Bank.
Kotak Mahindra Bank hopes to get regulatory approvals for acquisition of ING Vysya Bank by April 1, 2015.
At 09:37 hours IST, the scrip of Kotak Mahindra Bank was quoting at Rs 1,226.85, up 6.03 percent while ING Vysya Bank climbed 2.52 percent to Rs 834.75 on the Bombay Stock Exchange.
Posted by Sunil Shankar Matkar
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