HDFC Limited is all set to be merged with HDFC Bank as part of a transformational merger, said the regulatory filing by the two companies on Monday. Post-merger, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC Limited will own 41% of HDFC Bank.
Also, subsidiaries of HDFC Limited will become subsidiaries/associates of HDFC Bank after the merger exercise. HDFC Limited shareholders will receive 42 shares of HDFC Bank for 25 shares of HDFC Limited as per the scheme of arrangement.
The combined market cap of the two to be merged entities would be about Rs 13,83,498.26 crore.
Buoyed by the announcement, shares of HDFC Bank and HDFC Limited reacted positively and surged up to 16% in the early trade, with the latter hitting the upper circuit.
As the two leading companies in the financial sector have decided to merge, analysts largely believe it is a positive development for both entities, however, they also think it might not be entirely a merger of choice.