Shares of IDFC and IDFC Bank gained, while Shriram Transport Finance fell as IDFC’s $12-billion merger plan with Shriram Group has been called off over share swap ratio differences. IDFC said it was discontinuing discussions of merger with Shriram Group.
Shares of IDFC ended higher by 2.03 per cent at Rs 62.95 and IDFC Bank were up 1.25 per cent at Rs 56.65 on the BSE. On the other hand, Shriram Transport Finance shares fell 0.9 per cent to Rs 1,169.80.
Shriram Employee Trust, Piramal Group and Sanlam Group, which are large shareholders in Shriram Capital, were to become the largest holders in IDFC and drive the business, but the deal would have hurt the government, which owns a 16.38 per cent stake in IDFC.
Market experts said a complex structure proposed by deal makers was the key reason for the talks getting scuttled.
Earlier this month, IDFC and Shriram Group had agreed on a month’s extension of the 90-day confidentiality, exclusivity and standstill (CES) agreement for evaluating a potential combination of certain businesses and subsidiaries/affiliates of the Shriram Group engaged in the credit and non-credit financial services sector with the IDFC Group.
In identical stock exchange notices, IDFC, IDFC Bank, Shriram City Union Finance (SCUF) and Shriram Transport Finance Company (STFC) had said the extension of the agreement up to November 8 is in view of the extensive due-diligence process involved and the on-going discussions.