Shares of Bandhan Bank fell about 4 percent in morning trade on January 8, a day after its board approved a proposal to acquire housing finance firm Gruh Finance through a share swap deal. Gruh Finance was down by over 10 percent.
Gruh Finance, promoted by the country's largest mortgage firm HDFC Ltd, is into the financing of affordable housing segment.
Gruh Finance (GRHF) and Bandhan Bank have announced a scheme of amalgamation and according to the share swap ratio, for every 1,000 shares of Gruh Fin, shareholders will get 568 shares of Bandhan.
This is at an ~8 percent discount to the closing price of Gruh Finance as of January 7 and at a 2.5 percent premium to the last six months' average price.
The amalgamation will result in enhancement of shareholders' value accruing from the synergy of operations, new products development, integration of technology and information, both companies said in regulatory filings to stock exchanges.
“Bandhan Bank’s promoters needed to pare their stakes in the bank which was an important reason for the merger. HDFC will own 14.96 percent in the merged entity. The deal is sentimentally negative for Gruh Finance as the swap ratio gives it 7 percent,” Sharekhan said in a report.
“The merger is positive for HDFC as the merged entity becomes a stronger investment vehicle. It will be easier for HDFC to monetize its 15 percent stake in Bandhan bank going forward. At CMP, the HDFC stake valued at Rs 12,000 crore. Overall, we see the deal positive for HDFC, we have a buy rating on the stock with a target of Rs 2,200,” it said.
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