HDFC Bank will buy Centurion Bank for over $2 billion

February 25th, 2008 - 6:50 pm ICT by admin  

Mumbai, Feb 25 (IANS) In what would be India’s biggest financial sector takeover, HDFC Bank, the country’s third-largest bank by market value, said it would acquire Centurion Bank of Punjab Ltd for about Rs.95.1 billion ($2.38 billion). HDFC Bank said Monday that Centurion Bank’s shareholders would get one HDFC Bank share for every 29 held in an all-share deal.

The last traded price of HDFC Bank at the Bombay Stock Exchange Monday was Rs.1,422.70, compared with the Centurion Bank’s Rs.48.45.

Both scrips fell by 3.54 and 14.45 percent, respectively after the share-swap ratio was announced at the country’s bellwether exchange.

HDFC Bank’s board of directors accepted the valuation report by consultants Ernst and Young and Dalal and Shah for the share swap ratio, which would be one equity share of Rs.10 each for every 29 equity shares of Rs.1 each of Centurion Bank.

Centurion Bank said that its board Monday approved the swap ratio.

After the merger, HDFC Bank will add 2.5 million customers at 393 branches of Centurion Bank. The combined bank will have 1,148 branches and Rs.1.2 trillion ($30 billion) in deposits, the banks said in a joint statement here.

The boards of HDFC Bank and Centurion Bank of Punjab Ltd met Saturday to thrash out the merger and made an “in-principle approval”.

HDFC Bank told the BSE Monday that its board would again meet Thursday to formally approve the merger. It would then need shareholder and regulatory approval.

It would also consider making a preferential offer to its promoter Housing Development Finance Corp Ltd (HDFC) to enable HDFC to maintain its shareholding percentage in the HDFC Bank.

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