Leading mid-size banks Kotak Mahindra Bank (KMB) and ING Vysya Bank Ltd Thursday announced a merger to emerge as the fourth largest private bank in the country after ICICI Bank, HDFC Bank and Axis Bank.
The merger, approved by the boards of both banks earlier in the day, will take place in the swap ratio of 725:1000 shares, subject to approval of their respective shareholders and regulators. ING Vysya Bank investors will receive 725 shares of Kotak Mahindra Bank for every 1,000 shares they hold.
Kotak Mahindra Bank scrip, with a face value of Rs.5 per share, shot up 7.28 percent to Rs.1,157.05 at the end of Thursday's trading from its opening price of Rs.1,098.90 on the Bombay Stock Exchange (BSE).
Similarly, ING Vysya Bank scrip, with a face value of Rs.10 per share, rose 7.15 percent to Rs.814.20 at the end of trading from its opening price of Rs.788 on the BSE.
The Bengaluru-based ING Vysya Bank is a multinational entity, with the Dutch ING Group holding about 70 percent of its equity, following its acquisition of the city-based Vysya Bank Ltd in 2002.
"I am excited to announce the merger of Kotak Mahindra Bank and ING Vysya Bank, subject to approvals. We will work to create stakeholder value," Kotak Mahindra Bank vice-chairman and managing director Uday Kotak told reporters here.
The market value of the merged entity is estimated to be a whopping Rs.1 trillion (Rs.1 lakh crore).
"The merger will be on the basis of our stock's average price of Rs.1,090 per share in 30 days' of trading as against the average price of Rs.682 per share of ING Vysya Bank stock traded in the same period (30 days), Kotak said on the occasion.
