The boards of both companies have given final approval to the merger between HDFC and HDFC Bank, with an effective date of July 1st.
This merger represents a significant transformation for HDFC Bank, elevating it to the second-most valuable Indian company behind only RIL. In addition, this signals the end of an institution that pioneered large-scale, profitable, and socially relevant private housing finance. When the merger is accounted for, HDFC Bank’s assets will be 58% greater than the previous year. Given that other private banks are expanding significantly quicker than their public sector counterparts, the gap between the two will continue to narrow.
On or around July 17, the final market capitalization of the two entities will be determined, taking into account the value of the merged company, the effect of canceled HDFC shares, and the eradication of the holding company discount on earnings per share.
As part of the merger procedure, HDFC Investments (HIL) and HDFC Holdings (HHL) will first merge with their parent company, HDFC, effective on July 1. HDFC will then merge with HDFC Bank. HDFC Bank will issue 42 equity shares (each with a nominal value of Re 1) for every 25 equity shares (each with a nominal value of Rs 2) held by HDFC shareholders as of the record date, July 13. According to the proposal, the shares held by HDFC, HIL, and HHL in HDFC Bank will be canceled, and no dividends will be paid to them.
Chairman of HDFC Deepak Parekh, who is retiring as a result of the merger, is confident that the “HDFC way of working” will be maintained. He expressed his hope that the HDFC group would continue to uphold its fundamental values of kindness, fairness, efficiency, and effectiveness.
In his concluding letter to shareholders, Parekh emphasized economic optimism and the potential of housing finance. He acknowledged the unpredictability of the future and the danger posed to organizations by maintaining the status quo. He emphasized the significance of embracing change with courage because it fosters adaptability, growth, and new aspirations. Parekh assured shareholders that the merger aims to guarantee a limitless future for all parties involved.
