India’s biggest private sector bank and largest housing finance company on Monday announced a merger to create a banking giant. The respective boards of HDFC Bank and HDFC Ltd approved all stock amalgamation. This merger has resulted in a $ 40 billion deal. It will become one of the top three entities in terms of market capitalization. According to the deal shareholders of HDFC will receive 42 shares of HDFC Bank for every 25 shares held.
“A son acquires the business of the father which is a norm in Indian families.This is a friendly merger. We will not be thrown out because after 45 years in housing financing, we need to have our own home. That is HDFC Bank, the family business.” HDFC Chief Deepak Parekh said on the occasion.
State Bank of India has a total asset of Rs 48.46 Lakh crore with a market cap of Rs 4,57,297 crore. HDFC Bank has a total asset of Rs 26.80 Lakh Crore with a market cap of Rs 12,29,086 crore which puts it ahead of other Banks as other top banks SBI, ICICI Bank, PNB and BoB’s combined Market cap is lower than Market cap of HDFC Bank.
This merger will allow the new entity to be more fierce in their approach to get more customers as many of the customers of the bank doesn’t have mortgage.
If you had invested Rs 1000 a week ago in HDFC Bank it would have turned it into Rs 1119 and the same amount invested in HDFC would have turned it into Rs 1135.