IDFC - Three-Way Merger Getting Closer: ICICI Direct
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ICICI Direct Report
IDFC First Bank Ltd.’s board announced a merger with two group companies, IDFC Ltd. and IDFC Financial Holdings.
The board has constituted committee to work upon terms of proposed merger. The whole process of reverse merger could be undertaken in following ways-
IDFC to exit asset management company business and proceeds from sale to be distributed as one-time dividend. Post this, reverse merger with the bank wherein swap ratio is anticipated to remain neutral with only change in shareholder pattern.
IDFC to exit from AMC business and reverse merger to be undertaken with additional capital ploughed in the bank. In such scenario, swap ratio will be higher (to account for additional capital inflow) and the transaction will be win-win for both entities as it will strengthen bank’s balance sheet.
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