IDFC Ltd. To Merge With IDFC FIRST Bank, Board Gives Approval

In a recent development, the board of IDFC First Bank today, Monday, Jul 03, 2023, announced that it has approved the merger amongst IDFC Financial Holding Company Limited and IDFC Limited and the IDFC First Bank, and their respective shareholders, under Sections 230 to 232 of the Companies Act, 2013 ("the Act").

After HDFC Bank and Housing Development Finance Corporation, this is the second significant merger agreement in the financial industry.

Shareholders of IDFC Ltd. will receive shares of IDFC First Bank in appealing ratio as part of the merger. Every 100 shares of IDFC will be converted into 155 shares of the bank under the terms of the merger.

The Merger

The Bank in an exchange filing said, "the Board of Directors of IDFC FIRST Bank Limited ("IDFC FIRST Bank" or "the Bank"), at its meeting held today, July 03, 2023, has inter alia, approved the composite Scheme of Amalgamation ("Scheme") amongst IDFC Financial Holding Company Limited and IDFC Limited and the Bank, and their respective shareholders, under Sections 230 to 232 of the Companies Act, 2013 ("the Act") and other applicable laws including the rules and regulations which envisages (i) the amalgamation of (a) IDFC Financial Holding Company Limited into and with IDFC Limited; and (b) IDFC Limited into and with the Bank, and (ii) reduction of securities premium account of the Bank ("Proposed Transaction")."

It added, "The Scheme is subject to the receipt of requisite approvals from the Reserve Bank of India ("RBI"), Securities and Exchange Board of India ("SEBI"), the Competition Commission of India, the National Company Law Tribunal, BSE Limited and the National Stock Exchange of India Limited (collectively, the "Stock Exchanges") and other statutory and regulatory authorities, and the respective shareholders, under applicable laws."

"The Share Exchange Ratio for the amalgamation of IDFC Limited into and with IDFC FIRST Bank shall be 155 equity shares (credited as fully paid-up) of face value of ₹ 10/- each of IDFC FIRST Bank for every 100 fully paidup equity shares of face value of ₹ 10/- each of IDFC Limited."

It Further added, "The Board of Directors of the Bank has also accorded approval for the execution of an implementation agreement between IDFC Limited and IDFC FIRST Bank ("Implementation Agreement"), which, inter alia sets out the manner of implementing the Proposed Transaction contemplated under the Scheme, the representations and warranties being given by each party and the rights and obligations of the respective parties in relation to the Proposed Transaction."

Furthermore, "The Scheme shall be operative from the Effective Date (as defined in the Scheme). As per the Scheme, the 'Appointed Date 1' means close of business hours on the day immediately preceding the Effective Date, and 'Appointed Date 2' means opening of business hours on the Effective Date."

Stock Movement

Meanwhile, the shares of IDFC First Bank closed 3.20% higher at Rs 81.94 apiece on BSE. The shares of IDFC FIRST Bank in the past 1 week jumped 5.38% and in the past 1 year153.29%, respectively.

Whereas, the shares of IDFC closed 6.29% higher at Rs 109.10 apiece on BSE. Shares witnessed 9.08% upside in the past 1 week and 114.34% in the past 1 year.