ING Vysya Bank to merge with Kotak Mahindra Bank

In an all stock amalgamation, ING Vysya Bank on Thursday decided to merge with Kotak Mahindra Bank, creating the fourth largest private sector bank in the country.

ING Vysya shareholders will receive 725 shares in Kotak for 1,000 shares of ING Vysya. “The share exchange ratio is considered fair and reasonable given the underlying value of ING Vysya, as also giving shareholders the ability to benefit from the potential that can be realised upon merging into Kotak,” a press release issued jointly by Kotak Mahindra Bank and ING Vysya Bank stated.

 “This exchange ratio indicates an implied price of Rs.790 for each ING Vysya share based on the average closing price of Kotak shares during one month to November 19, 2014, which is a 16 per cent premium to a like measure of ING Vysya market price,” it added.

 The proposed merger would result in issuance of approximately 15.2 per cent of the equity share capital of the merged Kotak.

One of ING Vysya’s directors will be joining the Board of Directors of Kotak.

 The merger decision was taken at their respective board meetings of Kotak Mahindra Bank and the ING Vysya Bank held on Thursday.

 The amalgamation is subject to the approval of the shareholders of Kotak and ING Vysya respectively, Reserve Bank of India under the Banking Regulation Act, the Competition Commission of India and such other regulatory approvals as may be required.

 Upon obtaining all approvals, when the merger becomes effective, “all ING Vysya branches and employees will become Kotak branches and employees. ING Vysya’s CEO designate, Uday Sareen, will be inducted into the top management of Kotak reporting directly to Uday Kotak, Executive Vice Chairman and Managing Director of Kotak.”

 The combined Kotak will have 1,214 branches, with a wide-spread pan-India network, “getting both breadth and depth given the strong geographic complementarity between Kotak and ING Vysya.”

 “Substantial efficiencies will arise out of the proposed merger, which is likely to result in significant benefits for all stakeholders, be it shareholders, employees or customers, and ultimately the banking industry,” it added.

 ING Group, which owns 43 per cent in ING Vysya, has indicated that it supports the proposed transaction. ING Group will become the largest non-promoter shareholder in combined Kotak. “ING Group and Kotak intend to explore areas of cooperation in cross border business, on the basis of a framework for future cooperation that has been entered into, subject to mutual agreement on specific terms and all laws and regulations.”

 “The opportunities and synergies that this merger will create will place Kotak and its incoming stakeholders from ING Vysya on a new trajectory of excellence and leadership. I firmly believe this merger will pave the way for a bigger and better financial services player with deep Indian roots and global standards of service,” said Mr. Kotak, while addressing a press conference here.

 “Kotak values the diversity of ING Vysya, welcomes them as its family, and will work towards integrating them smoothly on this exciting journey that is ahead of us,” he added. 

Shares stage sharp rally

Shares of  ING Vysya Bank and Kotak Mahindra Bank witnessed sharp rally, and hit their 52-week highs intra-day due to aggressive buying. Shares of ING Vysya shot up by Rs.54.35 (7.15 per cent) to end at Rs.814.20 while Kotak Mahindra Bank registered a 7.28 per cent gain to close at Rs.1,157.05 on the BSE.

The share swap ratio announced indicates a price of Rs.790 for each ING Vysya Bank share based on average closing price this month. The valuation of the deal is around Rs.15,000 crore.

(With inputs from S. Varadharajan)

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Printable version | Jun 21, 2021 11:32:11 AM |

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