MUMBAI: In the largest merger in corporate history, HDFC will merge into HDFC Bank, creating a banking behemoth.
The share exchange ratio for the amalgamation of HDFC Limited with and into HDFC Bank shall be 42 equity shares (credited as fully paid up) of the face value of Re 1 (Rupee One) each of HDFC Bank for every 25 fully paid-up equity shares of the face value of ~ 2 (Rupee Two) of HDFC Limited.
HDFC Bank will gain from the ability to grow its mortgage bank. The merged entity will become a big challenger to SBI. HDFC will see its cost of funds come down.
HDFC Bank has a price to book of around 2.5 times based on one-year forward basis and HDFC trades at 2 times.
Completion of the merger is expected by Q2-Q3 of FY24.
HDFC Bank traded up 6.5% at 1604 while HDFC traded up 7% at Rs 2623.