Shriram, IDFC Group shares trade mixed after merger deal called off

Shriram City Union Finance rallied 4.5% to Rs 2,284, while Shriram Transport Finance trading 1% lower at Rs 1,169 after hitting a 52-week high of Rs 1,200 in early morning deal

Shares of Shriram Group companies such as Shriram Transport Finance and Shriram City Union Finance were trading higher by up to 4% on the BSE as the talks of merger with IDFC Group have called off after failing to agree on a swap ratio.

Shriram City Union Finance has rallied 4.5% to Rs 2,284 on the BSE in intra-day trade while Shriram Transport Finance was trading 1% lower at Rs 1,169 after hitting a 52-week high of Rs 1,200 in early morning trade.

IDFC Bank and IDFC were down 1% each at Rs 55 and Rs 61, respectively, as compared to 0.03% decline in the S&P BSE Sensex at 09:30 AM.

“Despite best efforts by both Shriram and IDFC, we could not reach common ground and arrive at a mutually acceptable structure and valuation,” Shriram City Union Finance and Shriram Transport Finance said in a regulatory filing.

Both parties had agreed to terminate any further discussions on the proposed potential combination, the statement added.

The two parties had, on July 8, entered into a 90-day agreement to evaluate a strategic combination of their relevant financial services. With no finality in sight, the parties had extended talks by a month till early November.

The proposal involved Shriram City Union Finance and the group’s retail operation being merged with IDFC Bank and Shriram Transport Finance delisting to become a wholly owned subsidiary of IDFC.

Since July 8, the stock of Shriram City Union Finance (down 12%), IDFC Bank (down 14%) and IDFC (up 3%) had underperformed the Sensex, which up 6% till Monday. Shriram Transport Finance, however, outperformed the market by gaining 8% during the period.