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As HDFC and HDFC Bank announce merger, here's a look at 10 biggest deals by Indian cos

As HDFC and HDFC Bank announce merger, here's a look at 10 biggest deals by Indian cos

As HDFC and HDFC Bank announce merger, here's a look at 10 biggest deals by Indian cos
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By CNBCTV18.com Apr 4, 2022 2:59:48 PM IST (Published)

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SUMMARY

In what could be the biggest merger in the financial sector in India, HDFC Ltd has announced that it will merge itself with HDFC Bank. As a result, HDFC Bank will be 100 percent owned by public shareholders, and existing shareholders of HDFC will own around 41 percent of HDFC Bank. The share exchange ratio shall be 42 equity shares, credited as fully paid up, of face value of Re 1 each of HDFC Bank for every 25 fully paid-up equity shares of face value of Rs 2 each of HDFC. Mergers and acquisitions (M&A) are a popular way for companies to enter new markets and expand existing ones. It could be part of a company’s strategy to grow market share, expand geographically, cut competition or profit from patents. Here are the 10 biggest mergers of India:

HDFC
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HDFC Ltd and HDFC Bank: HDFC Ltd, India’s largest housing finance company, has announced that it will merge with HDFC Bank, creating an entity with a combined market capitalisation of Rs 13.50 lakh crore, making it the third largest in the country and the biggest merger in the financial sector. Following the merger, HDFC Bank will be 100 percent owned by public shareholders and existing shareholders of HDFC Ltd will own 41 per cent of HDFC Bank. HDFC Ltd shareholders as on record date will receive 42 shares of HDFC Bank (face value of Rs one each) and 25 shares of HDFC Ltd at face value of Rs two each.

Zee Entertainment: Buy | Target: Rs 350 | Return: 24.64 percentPulled down by the sharp drop in advertising revenue, Zee's revenue slid 5.5 percent YoY to Rs 2,049 crore. Domestic ad revenue declined 15.7 percent YoY. On the new tariff implemented last year, domestic subscription revenue grew 21.7 percent YoY. The EBITDA margin slipped 720bps YoY to 27.6 percent."After the stake sale, management is now focusing on improving cash-flows and the balance sheet, through recovering receivables from related party, a huge positive. On the less than expected results, we cut our FY20 / FY21 EBITDA estimates respectively 4 percent and 6 percent, and our target multiple to 12x FY22 expected EBITDA (earlier valuing it at 13x FY21 EBITDA). Thus, we arrive at a target of Rs 350 (earlier Rs 364)," said Anand Rathi.The brokerage now valued Zee at 12x FY22 expected EV/EBITDA and upgraded recommendation to a buy. "Risk is any slippage in content ratings."
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Zee Entertainment and Sony India: In 2021, two of India’s biggest media conglomerates, Zee Entertainment Enterprises Limited (ZEEL) and Sony Pictures Networks India (SPNI), took first steps towards a multibillion-dollar merger. As per the announced deal, Sony Pictures Networks India Pvt. will own a 50.86 percent stake in the merged entity while Essel (Zee’s current holding firm) will own 3.99 percent stake. The rest 45.15 percent will be held by the public shareholders. As a part of the contract, Sony pictures had announced that it will spend $1.575 billion on the newly merged company.

vodafone idea share price, telecom
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Vodafone and Idea: In 2018, telecom giants, Vodafone and Idea completed their merger which was valued at $23 billion, according to Reuters. The two companies were pushed towards the merger due to the entry of Reliance Jio and the price war that followed. As per the deal Vodafone held 45.1 percent stake in the combined entity with the Aditya Birla group held 26 percent stake and the remaining held by Idea.

CNBCTV18
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HUL and GSK CH: HUL, one of India’s largest FMCG companies, announced its merger with GlaxoSmithKline Consumer Healthcare Ltd (GSK Consumer) in 2018. However, GSK Consumer’s parent firm, GlaxoSmithKline Plc (GSK), delayed selling the HUL shares it received as compensation until 2020. The overall business in this transaction was valued at Rs 317 billion. In the all-equity merger, HUL shareholders received 4.39 HUL shares for every GSK CH India share.

steel, union budget,
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Arcelor and Mittal: In what was called one of the most hostile transactions, Mittal Steel, one India’s largest steel corporations, merged with Arcelor Steel, a Luxembourg-based steel company. The new corporation ‘ArcelorMittal’ became the world’s largest steel company. The transaction was valued at $38.3 billion. In 2006, Mittal Steel chairman Lakshmi Mittal initiated a hostile offer for Arcelor which was followed by a long battle. Eventually, the two businesses united to form the world’s largest steel company, controlling 10 percent of the global steel market.

CNBCTV18
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NBFC Capital First and IDFC Bank: In 2018, IDFC Bank, a private lender, and non-banking financial company (NBFC) Capital First announced the completion of their merger. The deal created a combined loan asset book of Rs 1.03 lakh crore for the merged entity IDFC First Bank. The shares of the new entity were listed on the NSE and the BSE in 2019.

CNBCTV18
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Bank of Baroda, Vijaya Bank and Dena Bank: In 2019, the Government of India announced the first-ever three-way consolidation of banks in India. Bank of Baroda (BoB), Vijaya Bank and Dena Bank with a combined business of Rs 14.82 lakh crore were merged to make the third-largest bank after State Bank of India (SBI) and ICICI Bank. According to the scheme of the merger, shareholders of Vijaya Bank received 402 equity shares of BoB for every 1,000 shares held and shareholders of Dena Bank got 110 shares of BoB for every 1,000 shares.

IndusInd Bank
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IndusInd Bank and Bharat Financial: In 2019, IndusInd Bank Ltd. completed its merger with Bharat Financial Inclusion Ltd., bringing an end to India’s first for-profit microlender. About Rs 7,620-crore worth of loan assets were considered in the merged entity’s gross loan number. In accordance with the scheme, Bharat Financial shareholders received 639 shares of the bank for every 1,000 held, as per Bloomberg Quint report. (Image: Company)

telecom
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Indus Towers and Bharti Infratel: In 2020, the merger of Bharti Infratel and Indus Towers was aimed at creating a mega tower company. In the merger deal, Vodafone Idea received Rs 3,760.1 crore for its 11.15 percent holding in Indus Towers, as per a Livemint report. Following the merger, Vodafone Group held 28.12 percent stake in the merged entity, while the holding of Airtel Group had 36.7 percent.

HPCL approves Rs 2,500 crore share buyback
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ONGC’s MRPL and HPCL merger (Expected): The government-owned Oil and Natural Gas Corporation Ltd (ONGC) is considering merging its two refining companies, Mangalore Refinery and Petrochemicals Ltd (MRPL) and Hindustan Petroleum Corporation Ltd (HPCL). This development comes as part of ONGC’s consolidation drive for better resource management. The proposed merger was expected to take place in 2021, but it was delayed due to the pandemic. As per a Business Standard report, the process has already begun.

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