The Hindu Business Line : HDFC Bank, Centurion boards okay merger plan

In a joint statement issued after the board meetings on Saturday, the banks said the merger will be subject to “satisfactory due diligence, a fair share-swap ratio, requisite statutory, regulatory and corporate approvals, including those from the Reserve Bank of India, the stock exchanges and shareholders of both banks.”

The boards of both banks will again meet on February 25 to consider the share swap ratio after the receipt of the valuation reports. A decision with regard to the draft scheme of amalgamation and any other matters as required will be taken by the boards on February 28, the statement said.

Mr Deepak Parekh, Chairman, HDFC, the promoter of HDFC Bank, said: “We get scale…we will get about 400 branches at one go. Today, size is important in the banking sector. They (Centurion) have good presence in Punjab – thanks to Bank of Punjab, which was merged with Centurion – where they have sizeable exposure in the agriculture sector. Similarly, they have a large branch network in Kerala following the merger of Lord Krishna Bank. This would help us leverage the NRI business and probably tap opportunities in the Gulf.”

According to analysts, the advantages of the merger for shareholders of both the banks can be ascertained only after knowing the exact swap ratio. A section of analysts, however, feels that the swap ratio could work out to be 20:1 or even more than that.

“The swap ratio could be 20:1, If we assume the share price of Centurion Bank to move up to say, Rs 75 (Rs 58 last traded price on Friday) post the news of merger, then the swap ratio could work out to be 20:1 (1474/75) Rs 1474 being the last traded price of HDFC Bank’s scrip; that is 20 shares of Centurion would fetch one share of HDFC Bank,” said Mr Vishwas Agarwal, an analyst.

Centurion Bank of Punjab has acquired a number of banks, the most recent one being the Lord Krishna Bank in August 2007. Earlier, it had acquired BankMuscat’s Indian operations in 2003, which was then followed by Bank of Punjab in 2005.

Related Stories:
HDFC Bank, Centurion boards to consider merger
Centurion Bank scrip surges on merger buzz
Centurion Bank of Punjab open to acquisitions

More Stories on : Private Banks | Mergers & Acquisitions | HDFC Bank Ltd

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HDFC Bank, Centurion boards okay merger plan