Share price of HDFC Bank will continue to be in focus after the merger with HDFC

HDFC Bank shares closed up 1.51% at 1,701.75 apiece on the BSE on Friday. According to analysts at HDFC Bank, after the corporate action, share prices have witnessed a strong divergence and have crossed multi-month highs, the divergence remains positive with prices likely to rise to 1850 and 1670 as immediate support.

Although the exchange of shares between the owners of these two large companies is scheduled for July 13, 2023, the bank emphasized that the merger took effect only on July 1. This means that starting from Monday of next week and continuing until this year. The trading window of HDFC Ltd will be closed on July 13.

According to a stock exchange filing, HDFC Bank said on Saturday that HDFC Ltd. the merger has been successfully completed after receiving all necessary shareholder and regulatory approvals. Subject to receipt of all necessary permissions and approvals, HDFC Bank and HDFC Ltd. announced its intention to merge on April 4, 2022. They set a timeline of 15-18 months for the merger process.

The combined company brings together, among other things, the significant complementarities that exist between the two entities and is poised to create significant value for various stakeholders, including the respective customers, employees and shareholders of both companies, through increased scale, comprehensive product offerings and balance sheet flexibility. and the ability to drive synergies between revenue opportunities, operational efficiency and underwriting efficiency, the bank said in a stock exchange filing.

Pursuant to the exchange application, in accordance with the share exchange ratio specified in the scheme of amalgamation, HDFC Bank will issue and allot to the eligible shareholders 42 new equity shares of the face value of Re 1- each, which will be credited as fully paid, for each. 25 shares of nominal value 2- each to such HDFC Ltd. the shareholder has a fully paid entry on the Entry Date, ie 13 July 2023.

Commenting on the completion of the merger, HDFC Bank CEO and MD Sashi Jagdishan said, “This is a defining event in our journey and I am confident that our combined strength will enable us to create a holistic financial services ecosystem. We are truly delighted to welcome the talented team from HDFC Ltd. to HDFC Bank family. I believe our journey will be defined by agility, adaptability, and a relentless pursuit of excellence. As we move forward, we will embrace challenges as opportunities, learn from our experiences, and strive to be a benchmark for success and integrity in the financial services industry.

According to a stock exchange filing, post-merger HDFC Bank has not been identified as a promoter. It also marks the transformation of HDFC Bank into a financial services conglomerate offering a complete suite of financial services from banking to insurance and mutual funds through its subsidiaries. Until now, the Bank was the distributor of these products.

India’s largest housing finance company HDFC Ltd. the merger with the largest private sector bank in India combines the strengths of a trusted home loan brand with an institution that has a lower cost of funds. A higher net worth would allow more credit to flow into the economy. It will also enable the underwriting of bigger ticket loans, including infrastructure loans, and boost nation building and job creation.

All employees of HDFC Ltd shall become employees of HDFC Bank on the effective date. During the last months, the Bank has been preparing for the smooth integration not only of systems and processes, but also for all aspects that will make HDFC Bank a welcoming workplace for the employees of SIA HDFC.

After the merger, the main subsidiaries of HDFC Bank are HDFC Securities Ltd., HDB Financial Services Ltd., HDFC Asset Management Co. Ltd., HDFC ERGO General Insurance Co. Ltd., HDFC Capital Advisors Ltd. and HDFC Life Insurance Co. Ltd.

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Updated: July 3, 2023 at 8:59 IST

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