IDFC Bank, Shriram Group extend merger deadline
The decision to extend the merger agreement comes after the deal faced opposition from the shareholders of Shriram Group and IDFC Ltd
Mumbai: The boards of IDFC Bank Ltd and Shriram Group on Thursday agreed to extend the agreement for their strategic merger till 8 November, as the exclusivity period for discussions ends on 6 October.
“...Given the extensive due diligence process involved and the on-going discussions, the parties have agreed for extension of the CES (Confidentiality, Exclusivity and Standstill) Agreement up to 8 November 2017," said IDFC Ltd in a notice to stock exchanges.
The decision to extend the agreement comes after the deal faced opposition from the shareholders of Shriram and IDFC. Citing Shriram Group chairman Ajay Piramal, Mint had reported on 28 September that the merger discussions could even be called off if the deal structure is not favourable to shareholders of the Shriram group firms.
IDFC and Shriram announced their merger plans on 8 July, agreeing on a 90-day exclusivity period for completing the due diligence process. According to the merger plan, Shriram City Union was to be merged with IDFC Bank, and Shriram Transport was to be delisted and made a wholly owned subsidiary of IDFC, which was to act as the holding company of the merged entity. However, Shriram Group expects the deal could upset the shareholders of the transport finance company as they currently hold shares in a niche listed firm focused on vehicle financing.
On 27 September, The Economic Times had also reported that IDFC and Shriram were looking at a new, less complicated structure for the merger after opposition from shareholders. Piramal Enterprises Ltd is the single largest shareholder in Shriram Capital—the holding company Shriram Group with an effective stake of 20%. It also holds 9.96% in Shriram Transport Finance Ltd and 9.98% in Shriram City Union Finance Ltd.
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